Big Change to QuickBooks Online Payroll

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We don’t often get QuickBooks Online Payroll Updates, so this is exciting news.

I know we don’t like to, but sometimes it’s necessary to void or delete a paycheck. Now we can void or delete paychecks, regardless of the date the paycheck was created. Hooray!

Prior to this update, voiding and deleting checks from a payroll older than the last paycheck run was agonizing work because of the time consuming process. We either had to call Intuit Support for assistance or delete all prior paychecks in order to gain access to the one paycheck we needed to eliminate. Our frustration was compounded if the whole payroll run needed to be voided.

Honestly, I see this QuickBooks Online Payroll update as a feature designed for ProAdvisors, bookkeepers and accountants, because of the implications deleting paychecks has on payroll deposits and payroll reports.

This is one update I’m keeping close to the vest, which will enable me to oversee that important details are not deleted unnecessarily. Plus, how fun is it to act like the magic wizard who whisks in and fixes stuff with a wave of the wand?

If you’re like me, you have the voice of “Murph” in your head saying, "Don’t Delete, Void Instead."

This is great advice and best practice, because it enables you to preserve the audit log concerning the transaction. This especially is true for payroll checks from an audit standpoint. Even Dawn Brolin would be thrilled to see us keep the transaction in QBO as a voided check, so later it could be viewed if necessary.

But when it comes to QuickBooks Online Payroll checks, here’s the deal with delete and void. Payroll checks that have been cashed are voided, but payroll checks that have not been cashed are deleted. There are no other options at this time. Direct deposits for payroll can only be voided since action has taken place outside of QuickBooks Online.

Voiding or Deleting Payroll Checks in QuickBooks Online Payroll

  • Select Employees from Navigation Bar.
  • Choose the Employee associated with the paycheck to be deleted or voided.
  • Select View Paycheck list.
  • Select the Paycheck you need to delete or void – QuickBooks will display the paycheck you select.
  • Click the Void or Delete button at the bottom of the paycheck window.
  • QuickBooks will not prompt you to answer the question "has the check been cashed?" If you answer the question no, QuickBooks will help you Delete the paycheck. (You probably need to verify the correct answer to this question with the employee and/or your bank.)
  • QuickBooks now will display a warning message informing you that deleting the check will permanently remove the transaction from your books and your taxes will be adjusted.
  • Click the checkbox "I understand that this action cannot be undone."
  • QuickBooks will highlight the Delete Paycheck button, click the button to delete the paycheck.
  • If, on the other hand, your answer to the question "has the check been cashed?" is yes, QuickBooks will help you Void the paycheck. (Once again, you probably need to verify the correct answer to this question with the your bank and/or the employee.)
  • QuickBooks now will display a warning message informing you that voiding the transaction will maintain a record of the transactions in your books, even though your accounts and taxes will be adjusted.
  • You will need to check the box confirming you understand that the void action cannot be undone. You also will need to click the Void Paycheck button in order to finalize the process.

The windows QuickBooks displays and the steps you will take in the last few steps outlined above for voiding a paycheck close approximate the final few steps taken when voiding a direct deposit payroll transaction in QuickBooks Online (see next page). 

Voiding Direct Deposit Payroll in QuickBooks Online Payroll

The reality is that fewer and fewer "paper paychecks" are being written these days. Today, more and more direct deposits of employee payroll transactions are being made. We can bet that even more of these electronic transactions will take place in the future. 

I mean, after all, we are all moving to a paperless society, right?

Many direct deposit payroll transactions already will have been posted into an employee's bank account prior to the time you find a serious enough issue to warrant that their payroll be reversed. That means QuickBooks had to set-up a different way to handle these direct deposit payroll transactions. 

QuickBooks Online Payroll only allows you to void a direct deposit payroll transaction using the following steps:

  • Select Employees from Navigation Bar.
  • Choose the Employee associated with the paycheck to be deleted or voided.
  • Select View Paycheck list.
  • Select the Direct Deposit Payroll transaction you need to void – QuickBooks will display the paycheck you select.
  • Click the Void button at the bottom of the direct deposit paycheck window.
  • QuickBooks now will display a warning message informing you that voiding the transaction will maintain a record of the transactions in your books, even though your accounts and taxes will be adjusted. (Of course, you will need to collect payment from your employees for the amount already deposited into their account.)
  • If you wish to proceed with voiding the direct deposit payroll transaction, click the checkbox, "I understand that this action cannot be undone."
  • QuickBooks will highlight the Void Paycheck button – click the button to void the direct deposit payroll transaction.

In some ways, I love this new added control over payroll, but I stand behind my position that this is a ProAdvisor, bookkeeper or accountant feature, since adjustments will need to be issued for all payroll reports and deposits if they have previously been submitted.

But truly it’s such a joy to see QBO blossom and expand in features, even with QBO Payroll, #GoQBOP

Liz Scott is a Certified Intuit ProAdvisor, QuickBooks Online Specialist, and Professional Consultant.

Editor's Note: With more and more businesses moving to direct deposit of payroll, I wonder if Intuit will ever incorporate drafting the funds back from the employee's account as part of their voiding of a payroll transaction process? I'd like to hear what you think about this. Do you think direct recovery of funds from an employee would be a good or a bad?

Post a comment below to let us hear what you think on this topic.