How to pay out vacation pay in QuickBooks?

How to pay out vacation pay in QuickBooks?

by qbproca

Want to know how to pay out vacation pay in QuickBooks, then you would need to first specify vacation hours. Vacation hours can be setup easily using the employee’s tab. Though you can pay out for vacation as a one shot payment, this can also be done in monthly installments, it’s just a matter of practice you follow.

Are you a Quickbooks user?

To payout for the vacation pay in QuickBooks;

  • Enter the hours available,
  • Enter the total hours worked,
  • Enter vacation hours along with some other detail and your employee’s payout will be calculated.

QuickBooks so far only supports manual vacation payout and is working on to have the automatic feature enabled. Till the time, the feature is rolled out; you would need to pass manual entries in order to do the payout correctly.

Ways in which vacation payouts can be done:

  1. Paid out as a part of gross pay.
  2. Accrued method.

Percentage of gross pay:

This method is as simple as it sounds. Just calculate the gross pay and your vacation pay out will be calculated for the percentage you specify.

How to pay out vacation pay in QuickBooks: accrued method.


The % of gross pay method is very rarely used. This is not because the process is simple but the vacation pay will be different every single month. Thus in order to follow a standard pay policy, use the accrued method. This is used when vacations accrue and you are paying for the time off.

Steps to pay out vacation pay in QuickBooks:

  1. With your QuickBooks logged in, click on the employee’s tab.
  2. Choose the run payroll
  3. Select an employee for whom you want to view the vacation balance.
  4. Choose the preview payroll
  5. Select the pencil icon from the displayed window. This will now allow you to edit settings. Please note that we don’t have to change the default preference as we just want to view the remaining vacation hours left.
  6. Click Ctrl+F and enter vacation hours. You will be taken to “hours remaining” tab.
  7. View the remaining balance available and click cancel button to exit the window. Now here are two scenarios:
    • Paying on an hourly basis: If your employees are being paid on hourly basis then you don’t have to do anything. Just run your payroll normally and your pay out for vacation pay will be taken care of.
    • Paying by Salary: If you are paying your employees by salary then you would need to change the method and consider hourly method. Once you do that, on the basis of your vacation hours, your payout will be calculated.
  8. Find a total number of hours worked in a week, month and then a year. Enter all the info. within QuickBooks.
  9. Verify the monthly salary of an employee and divide that by a number of hours worked in a year. E.g. if you pay $20,000 and a number of hours worked in a month are 200 hrs. then your pay per hour would be $100.
  10. Now enter the hourly rate you just calculated within the program and run the payroll.
  11. Provide any further detail, like vacation hours and submit the payroll and you will successfully be able to pay out vacation pay in QuickBooks.

If you have followed every step then you are all resolved but if you are still facing issues and your query “How to pay out vacation pay in QuickBooks” is still not sorted, then talk to our QuickBooks proadvisors. Our technical staff is experienced enough to take your every query. Thus waste no time further and get in touch with us now.

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