I’ve been thinking a lot about QuickBooks & payroll this week. I love doing payroll. Even with the curse of badly hand-written timesheets it’s just something that makes sense to me and using the Enhanced version of QB payroll so that I have access to the tax forms still allows me to make any corrections to entries via the timesheet & paycheck instead of having to use journal entries or a customized transaction. This makes it so very simple to correct any mis-assigned customers or projects and produces a complete P&L by job. But I am not trying to sell you on using QuickBooks payroll services.
If you are a small business that depends on job costing to keep track of your projects, using QuickBooks payroll is the easiest way to capture your data. Of course, it’s only easy if the process is simple and efficient for your company which is why most of you use an outside payroll service. But if you use time tracking software, like T-Sheets, you can sync your employee’s time directly into your QuickBooks file, even when you don’t use QB payroll services.
But there are other ways to allocate labor expenses.
I provide payroll services to a company I work with. This means that it is separate from their QB file. I record their payroll information in their company’s file the same way I handle it for another company that uses an outside payroll service. I have created items that are assigned to the correct COGS, expense and liability accounts and record the debits from the bank account via a check or bill payment. Specific items are allocated to customers/projects including any payroll expenses that are passed on to their customers.
For this company, the office manager handles the day-to-day bill paying but does not write separate checks so I created memorized bill that assigns one item for the entire gross salary and separate items for the tax deductions or reimbursement additions. They open the memorized transaction then simply enter in the amounts shown on their paystub. This has been set up so there is no delay in the staff getting paid needing only to use the Pay Bills function to print the paychecks.
When I make my office visit, I edit the bill to allocate the job expenses.
I will admit supporting job costing needs with an external payroll service can be a lot of work when there is no established system in place for recording time. For the company where I am their payroll service, I have created an electronic timesheet using Excel that allows the staff to enter start and end times for their daily tasks and record codes that are used to automatically calculate the time and gross costs as well as the FICA and Medicare for the job-costed project. Standardizing this process allows me to quickly update the “paycheck” bill and allocate the time and taxes per project. I simply enter in the hours worked per project or for company’s administrative payroll expenses.
Total hours less job-costed project hours equals company admin hours.
And I check my numbers. If everything has been entered correctly – and the check won’t match the payroll report if it wasn’t – the payroll liabilities account will zero out when the taxes are paid.
But this process doesn’t require extensive QB experience and the job allocation could be handled by the office staff with a clear set of written instructions.
And did you know that you can use QuickBooks time tracking even if you don’t use QuickBooks payroll? If you use an outside service like TSheets, your employees or vendors can track their time and you can sync the information directly into QuickBooks.
So, to conclude: Setting up time job costing can be fun.
You got that. Right?
KC Solutions Bookkeeping 