Unraveling QuickBooks Error PS038 A Complete Guide

QuickBooks Error PS038

Encountering QuickBooks Error PS038 can be frustrating, as it hinders the processing of direct deposits in QuickBooks Payroll. In this article, we will explore the reasons behind this error, identify common signs of its occurrence, and provide a detailed troubleshooting guide. Additionally, we will address frequently asked questions and conclude with a toll-free helpline number (+1-888-704-1357) to seek support from QuickBooks Data Services.

Reasons for QuickBooks Error PS038:

  1. Outdated Payroll Tax Table: Using an outdated version of the Payroll Tax Table can trigger Error PS038.
  2. Incorrect Payroll Service Key: Entering an incorrect or expired payroll service key can result in this error.
  3. Damaged Company File: A damaged QuickBooks company file can also lead to Error PS038.
  4. Connectivity Issues: Poor network connectivity or interruptions during the direct deposit process can cause this error.

Signs of QuickBooks Error PS038:

  1. Error Message: QuickBooks displays an error message stating “Error PS038” or “An internal file in QuickBooks has become unreadable.”
  2. Direct Deposit Failure: You are unable to process direct deposits for employees, and the transactions fail repeatedly.
  3. Delayed or Frozen Direct Deposit Process: The direct deposit process takes longer than usual or freezes, preventing successful completion.

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Prior Considerations before Troubleshooting:

Before proceeding with troubleshooting, it is important to consider the following:

  1. Update QuickBooks: Ensure that you are using the latest version of QuickBooks, including all payroll updates and patches.
  2. Verify Payroll Subscription: Confirm that your QuickBooks Payroll subscription is active and up to date. Check if the payroll service key is valid.
  3. Backup Company File: It is crucial to create a backup of the company file before attempting any troubleshooting steps to avoid data loss.

Troubleshooting Steps for QuickBooks Error PS038:

Note: Follow these troubleshooting steps in the order presented below:

  1. Update the Payroll Tax Table:
    • Go to the “Employees” menu and select “Get Payroll Updates.”
    • Choose the option to download the latest payroll updates.
    • After the update is complete, restart QuickBooks and attempt processing the direct deposit again.
  2. Verify Payroll Service Key:
    • From the “Employees” menu, select “My Payroll Service” and then “Manage Service Key.”
    • Check if the payroll service key displayed matches the one provided by QuickBooks.
    • If the key is incorrect or expired, contact QuickBooks support or your payroll service provider to obtain the correct service key.
  3. Rebuild and Verify Data:
    • Make a backup of your company file before proceeding.
    • Go to the “File” menu, select “Utilities,” and choose “Rebuild Data.”
    • Follow the prompts to rebuild the company file.
    • Once completed, go to the “File” menu again, select “Utilities,” and choose “Verify Data.” Address any errors detected during the verification process.
  4. Check Network Connectivity:
    • Ensure that your network connection is stable and not experiencing any disruptions.
    • If using Wi-Fi, consider switching to a wired connection for a more reliable connection during the direct deposit process.
  5. Seek Professional Assistance:
    • If the troubleshooting steps mentioned above do not resolve Error PS038, it is advisable to contact QuickBooks Data Services at the toll-free helpline number +1-888-704-1357.
    • QuickBooks experts can provide specialized support tailored to your specific error and offer further assistance.

Frequently Asked Questions (FAQ):

Q1: Will I lose my direct deposit data during troubleshooting?

A1: No, the troubleshooting steps provided above do not involve data loss. However, it is always recommended to create a backup of your company file before proceeding with any troubleshooting.

Q2: Can I process direct deposits manually while troubleshooting Error PS038?

A2: Yes, you can process direct deposits manually as an alternative while resolving the error. Consult your payroll service provider for instructions on manual processing.

Q3: How long does it typically take to resolve QuickBooks Error PS038?

A3: The time required to resolve the error depends on the complexity of the issue and the effectiveness of the troubleshooting steps. It is advisable to follow the steps diligently and seek professional assistance if needed.


QuickBooks Error PS038 can disrupt the direct deposit process, causing inconvenience for businesses. By following the troubleshooting steps outlined in this article, you can resolve many common issues associated with Error PS038. However, if you encounter persistent problems or need personalized assistance, QuickBooks Data Services is available to provide expert support. Reach out to their toll-free helpline at +1-888-704-1357 for further assistance. Ensure smooth direct deposit processing in QuickBooks by promptly addressing Error PS038 with confidence.

By Olivia Bradley

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