How To Create A Final Paycheck For Terminated Employee In QuickBooks

Last Updated on January 14, 2021 by

You all know about the final terminated paychecks which are controlled by a different set of state rules which shows that when a worker must be paid when they are separated from the job because of discharge, layoff, or resignation.

Every employer has to give the final paycheck to their employees but their duration of time may vary as per law their state is having. According to their state law, you may even need to issue the paycheck on the final working day. But the final paycheck law by the state can be varied in other cases as if the employee will be fired or they have quit themselves.

All the rules and the protocols ensure that employees collect all the wages they have to earn on or after their last day of employment. So, here you will be known about how to create final paychecks for terminated employees in QuickBooks.

What is the Difference Between Terminated Paychecks and Severance Paychecks 

Terminated Paychecks (Final)	Severance Paychecks
If you have terminated an employee for any reason which includes discharge, layoff, or resignation then you have to pay them for all time owned.	It is the pay package offered to the employees is based on the length of service and salary requirements. But there is no need in the fair labor standards act (FLSA) for severance pay.
The payment which has to be paid depends on the agreement which you have with your employees.	Here payment is subjected to regular federal taxes. You can do payment severance as a regular, unscheduled, or bonus paycheck.
Even you have to compliant with the state and federal tax laws.	If you pay severance pay as a bonus or commission then you have to use supplemental withholding tax rates.

Steps to Create Paychecks For a Terminal Employee in QuickBooks

If you want to create paychecks for terminal employees in QuickBooks Online Payroll, QuickBooks Desktop Payroll, Intuit Online Payroll so you can see all the steps below:

Steps for Creating Paychecks for Terminated Employee in QuickBooks Online Payroll

You are having two options for creating final paychecks if you are using QuickBooks Online Payroll. They have scheduled Payroll and unscheduled Payroll for final paychecks. So, you have to go through the steps which are below for creating any type which you want to create.

For Scheduled Payroll Terminated Employee Paychecks

• First, you have to go to the Payroll menu and then you have to select the employee’s option from it.
• In this step, you have to click on the run Payroll. But if you are having a Payroll schedule, then you have to select it and then click on continue.
• Then you have to select the connected bank account in QuickBooks for tracking this type of Payroll transaction. You also have to review the payment period and the payment date.
• Now you have to click on the employee which you want to pay.
• After this, you have to enter their hours, compensation, memos, or any other necessary paycheck information.
• In this step, you have to see under Pay method for each employee and then you have to select the link for choosing a paper or direct deposit paychecks.
• Then you have to click on preview Payroll.
• Now you have to select preview Payroll details for reviewing the details and then you have to click on save for late or you have to submit Payroll.
• At last, you are ready, and then select Finish Payroll.

After you have created the employee’s final paycheck for the terminated employee, then update their employee status. Then you have to remove them from your current employee list so that you can do not bill for them anymore.

For Unscheduled Payroll Terminated Employee Paychecks

• First, you have to go to the Payroll menu and then you have to select the employee’s option from it.
• In this step, you have to select one of the following from the dropdown list as a bonus only, commission only, or fringe benefits if you have already selected one of these as per the pay type.
• Now you have to select it as net payment if you know the exact amount which you need to pay the employee or you can click on gross pay.
• Then you have to enter the additional information about taxes or paychecks calculations.
• After this, you have to select the bank account which you want to use in QuickBooks for tracking this type of Payroll transaction. You also have to review the payment period and the payment date.
• Now you have to click on the employee which you want to pay.
• After this, you have to enter their hours, compensation, memos, or any other necessary paycheck information.
• In this step, you have to see under Pay method for each employee and then you have to select the link for choosing a paper or direct deposit paychecks.
• Then you have to click on preview Payroll.
• Now you have to select preview Payroll details for reviewing the details and then you have to click on save for late or you have to submit Payroll.
• At last, you are ready, and then select Finish Payroll.

After you have created the employee’s final paycheck for the terminated employee, then update their employee status. Then you have to remove them from your current employee list so that you can do not bill for them anymore.

Steps for Creating Paychecks for Terminated Employee in QuickBooks Desktop Payroll

There is a specific termination paycheck type in the QuickBooks Desktop Payroll.

But if you want to create a second paycheck for covering things that include separate checks for a severance payment, that there are two options for creating final paychecks which are scheduled Payroll and unscheduled Payroll for final paychecks. You have to create this type of paycheck before creating an end paycheck.

• First, you have to go to the employee’s menu and then you have to select the pay employees, and then click on the termination check.
• In this step, you have to review the pay period ends date, check the date, and the bank account from where the payment is coming. ( If you want to avoid the late fee, then you can date the check for today or for a future date).
• At last, you have to put a checkmark next to the employees for which you have to give a termination paycheck also.

Steps to Create a Termination Check

• First, you have to see under the release date column, you have to click on the calendar option. Then you have to click on the employee’s release date or you can enter the employee’s release date.
• In this, you have to enter and review the hours and salary.
• Then you have to select open paychecks details for reviewing the paychecks details.
• Now you have to send the check as a direct deposit, you have to select and then check the use of the direct deposit checkbox. But if you do not want the paycheck to be a direct deposit then you to select and then uncheck the option.
• After this step, you don’t need vacation or sick time to accrue for the specific paychecks. Then you have to select the do not accrue sick/vac checkbox.
• At last, when you are done then you have to click on save and next to create a check for another employee. Even you can select the save and close option to go back to the enter Payroll information window.

You have to keep one thing in mind that if you are using direct deposit for paying the termination check then you have to send the Payroll to Intuit by 5:00 pm. You have to come two days before the check date.

Steps to Finish Processing the Paychecks

• First, you have to go to the enter Payroll information window, and then from there, you have to click on continue.
• Then, you have to go into the make employees inactive window where you have to click on make inactive for making the employee inactive. Then they will not be showing Payroll anymore or you can select keep as active.
• Now you have to review the amounts for each employee.
• After then, you have to review the check or direct deposit printing options.
• At last, when you are ready then you have to select create paychecks.

For the QuickBooks Desktop Payroll assisted users or suppose you have to send checks by direct deposit. Then you have to follow the steps for sending your Payroll information and the direct deposit paychecks to Intuit.

You have to keep one thing in mind that QuickBooks Desktop will not warn or change a late Payroll processing fee of $100:

• First, the employee has a release date in the employee record that will match the Payroll send date or the earlier date.
• Then the paycheck date is today or later.

Steps for Creating Paychecks for Terminated Employee in QuickBooks Desktop Payroll

In the Intuit Online Payroll, you have to make a regular, bonus, commission, or fringe for final paychecks. Here are the steps for it:

• First, you have to go to the Payday option and then you have to select a payment schedule.
• Then you have to choose the type of check which you are creating from the check type field. Then you need to run a scheduled Payroll and then you have to click on the regular check. But for unscheduled Payroll which use to include a separate check for a severance payment you have to
  • First, you have to select bonus checks, commission, or fringe benefits.
  • Then you have to enter the additional information about the taxes or of the paycheck calculations.

• Now when you have to select the check type and then click on go.
• After it, you have to select the employees which you need to pay.
• In this step, you have to enter their hours, compensation, memos, or any other necessary paycheck information which includes whether the paycheck should be a paper or direct deposit.
• Then you have to click on the create paychecks.
• Now review the amounts and payment methods.
• At last, when you will be ready you have to click on approve paychecks.

After you have created the employee’s final paycheck for the terminated employee, then update their employee status. Then you have to remove them from your current employee list so that you can do not bill for them anymore.

How to Pay the Terminated Employee by Final Paychecks

If you want to pay the final paycheck  to the terminated employee then you need to follow these steps:

• First, you have to go to the employees and then choose run Payroll
• Then you have to choose the checkbox which is present near to the name of the employee that you are terminating.
• In this step, you have to insert all payment information for the final paycheck.
• After this, you have to be sure that all other employees are unchecked.
• Now you have to choose preview Payroll.
• Then, you have to confirm all the information once, then you have to click on submit Payroll.
• At last, you have to select the finished Payroll.  

Procedure to Update Your Employee’s Payroll Status

When you have created the final paycheck for your employee, then you have to update their employment status in your Payroll service.

Steps to Update your Employee Payroll Status in QuickBooks Online Payroll

For updating the employee Payroll status in QuickBooks Online Payroll are:

• First, you have to go to the workers or Payroll menu and then you have to select the employee option.
• Then you have to choose the employee name. But if the employee is not on the list, then you have to select all employees from the active employees from the dropdown menu list.
• Now, you have to click on the edit option which is next to the employment. But if you do not see the employment option then you have to check that if you have paychecks created in your Payroll account or not. There should be at least one paycheck created for you for changing the employment information.
• After then you have to go to the status dropdown list and from there you have to click on terminated or another appropriate status such as paid leave of absence, unpaid leave of absence, deceased. You have to select not on Payroll if you layoff or furlough employment.
• At last click on done.

Steps to Update your Employee Payroll Status in QuickBooks Desktop Payroll

For updating the employee Payroll status in QuickBooks Desktop Payroll are:

• First, you have to go to the employee menu and then you have to click on the employee center.
• In this step, you have to find and open the employee’s profile.
• Now you have to click on the employment information and then you have to click on the terminated option. But you have to keep in mind that if you are cutback or leave an employee then you have to select the leave of absence option instead. Then complete the necessary fields like start date and type.
• Then you have to enter the status in the termination type field.
• After then, you have to fill in all the necessary information such as the release date. Then you also have to remove the employee from your active employee list and then you have to click the employee is an inactive checkbox.
• At last, when you have done you have to click on ok.

Steps to Update your Employee Payroll Status in Intuit Online Payroll

For updating the employee Payroll status in Intuit Online Payroll are:

• First, you have to select the employee’s option.
• Then you have to choose the employee name. But if the employee is not on the list, then you have to select all employees from the show dropdown menu list.
• Now, you have to go to the employment section and then you have to select the edit option.
• After then you have to go to the status dropdown list and from there you have to click on terminated or another appropriate status such as paid leave of absence, unpaid leave of absence, deceased. You have to select not on Payroll if you layoff or furlough employment.
• At last, when you have done you have to click on ok.

Final Words

Hope this article is helpful to you as here we have discussed how to create paychecks for a terminated employee in QuickBooks, also how to pay and update the status of the employee. If in case after following these steps your error is not solved or you are having any query at that time you can contact QuickBooks ProAdvisor and can get a quick and best solution to your issue.