I do payroll for an organization that uses classes for everything. Most of the organization's 20 employees work in different areas (classes) of the business. I use Timesheets and Time Data to create paycheques. This allows me to classify all earnings items for each employee. There are Other Payroll Items which cannot be added to Timesheets (like Insurance Deductions, VacPay Accrual Paid out, etc) or classified in the Paycheque Review screen. These Other Payroll Items MUST be classified. How can I do this?
Thanks for posting your question in the Community. It's always good hearing from you.
I want to make sure you get the most accurate answer for your question. I recommend reaching out to an accounting professional to get the best suggestion possible. You can search for an accounting professional right from our website. Let me know if you have questions. I'm here to steer you in the right direction.
First, the discussion was posted in Paying Employees and read: How do I classify Paycheques?
Second, why would an account have any idea how to apply a Class to a Credit Card? Please read the questions before sending people on a wild goose chase.
I can't confirm this right now, but I have done this before with a construction company. If I recall, when you use Class tracking (or Job tracking) on the different lines of your income Payroll Items, Quickbooks automatically assigns all of the other expense Payroll Items to the same classes, proportionately. For example, if 10% of your payroll income lines are assigned to one class, 30% to another, and 70% to another, you should find your other payroll expenses on the same cheque being apportioned to each class in the same percentages.
Make sure that Class Tracking is turned on in 'Accounting' preferences. Also make sure that 'Job Costing for pay cheque expense' is selected in the 'Payroll & Employees' preferences.
You can test this by doing a report and filtering by Class to see the transactions coming from the pay cheques. You should see that the CPP Expense, EI Expense, benefits expense and any other expense on the pay cheques are being allocated properly to your different classes.
I want to make sure that I'm following your question. The bulk of what you're asking is related to classifying payroll items in QuickBooks Desktop, but the title for the question is about classifying credit card payments. I'll focus on the payroll items and Timesheets/Time Data since that seems to be where your focus is, but don't be afraid to reach out if you'd like some direction about credit card payments as well.
I can see how having classes for your payroll items is important considering your employees work for different areas of the business. While class can't be added to all payroll items, it's possible to add class to an employee, which may satisfy your needs. To do this, simply double click on an employee name from the Employee Centre to edit their profile and then navigate to the Payroll Info tab. From there, you'll be able to add a class to your employees. In doing that, QuickBooks will automatically add the class to payroll items that can have class assigned to them directly on the employee's paycheque. If something needs to be classed differently, you can change it in the options on the Review or Edit Payroll window if it's available for the item. You'll then be able to filter by class when you customize reports and run them.
Timesheets and Time Data are used for registering the hours worked for an employee. Payroll will pull this information from the Timesheets if you have it set up that way and add it to the regular paycheque, so there's no need to add deductions and other payroll items to the time card. It's on the paycheque details in the Payroll Centre that you'll see the additional payroll items such as VacPay Accrual Paid out and so forth come into play.
I hope that helps clear that up. Enjoy your weekend.
I should have also mentioned that when you choose the option in 'Payroll & Employee's' - Job Costing, Class and Item tracking for pay cheque expenses, Make sure to also check 'Assign one class per Earnings item'. If you choose 'Entire Pay cheque' then you won't be able to split your lines to different classes.
For sake of clarity, I've attached some visuals to show what happens when you do as I suggested in earlier post. The one step I missed earlier was that each Payroll Item must also have 'Track Expenses by Job' checked off, including all Vacation items so that accrued Vacation expense will be separated into classes as well.
Thanks for all the replies. I should be more specific: I, too, have been using class tracking for many years for various companies. Up until the first paycheque in January 2019, everything was fine - nothing left unclassified. With the first paycheque in January, anything recorded in the Other Payroll Items section of the paycheque is recorded in the Unclassified column of Financial reports. I see that there is NO OPTION to classify these payroll items, but as this always been the case, what happened that these items are no longer carried with all the other Payroll Items applied.
It might be the class option in the Preferences was toggled to Earning items, impossible. Hence, the system is classifying the payroll items.
We can toggle this option back to Entire paycheck. Here's how to do it:
This should correct the classification of your payroll transactions.
Let me know if you need anything else, impossible. I'll be right here.
There is the option to classify the Other Payroll items section. Open each payroll item you want classified and check off 'Track Expenses by Job'. Please see attachment on my previous post.
Already doing that - for several years! What I need to classify is a Deduction from an employee's net pay for their portion of Extended Health. It must be classified for several reasons:
1) Each employee works in several classes in a PP.
2) Several Classes are reported directly to the Gov. for funding purposes. NOT possible to guess or average - they want exact numbers to the penny.
3) It's ridiculous that if I select Entire Paycheck option, the amount is classified. If I select Line Item, there is no option to classify this line but it is reported in the Unclassified column.
As I stated previously, the function was working until the first paycheque in January. Intuit must have changed something with the Tax Update or other update around that time. My setup has not changed.
Regardless of the reason, anybody have any ideas on how to apply a Class to a Payroll Item recorded in the Other Payroll Items section of the paycheck?
Exactly - each Payroll Item will be classified if you go into that Payroll Item and choose 'Track Expenses by Job'. This is on top of choosing 'Job Costing, Class and Item tracking for pay cheque expenses' and choosing each 'Earnings item' in the Payroll & Employees preferences.
When you do both of these, and you classify each entry on the timesheet, the timesheet brings in those earnings items into your paycheque separated by Class, but QB will also then split all of your payroll expense items that are in the 'Other Payroll Items' section in proportionate % to the same classes used on your earnings items. For example, if 30% of your total wage items is going to Class A, then 30% of each of your expense items will also go to Class A.
That's exactly how I have it setup. Note that in your screenshot - under Other Payroll Items where you have Group Insurance $50 - you have not classified this line. This is EXACTLY what I need to apply a Class to. It cannot be classified on the Timesheet!
@impossible , this is what I'm trying to explain to you. As long as you have opened your Group Benefits expense item and checked off 'Track Expenses by Job', the Group Benefits expense will separate into the same classes as you have your income items attributed to on your timesheet. You don't have to enter each expense to the Classes manually. It happens automatically when you make your pay cheque.
The same must be done for all Other Payroll Items that you want to separate into classes on paycheques, including Vacation items. You aren't going to see the division of class on these expenses in the Pay Cheque window. But you will see them on the P & L by Class or a custom Expenses by Class report.
Note Review Pay Cheque Window only shows the classes that have come in from your timecard on your wage items.
In your Company Summary are all of the items which you wish to see separated into classes.
Now pull a report. In this case I pulled P & L by Class and filtered only for this pay cheque's transactions for the purposes of illustration. Note that the Group Benefits, CPP-Company, EI-Company, Vacation Expense, and even WCB expenses (which just isn't showing in the window because you would have to scroll down to see it), have all been proportionately separated into classes on the report.
I have done nothing to make these class separations other than make the pay cheque above with the wage items set to classes that imported from the timecard. QB has done all these separations automatically because Job Tracking is checked off on all available payroll expense items that you want to classify (including Vacation items), and Job Tracking for each line item was checked off in payroll preferences.
Take the Group Benefit expense, for example. We only have one entry for $50.00 on the pay cheque. But because 23.08% of your Wage expense was classified to Class 1, QB has now classified 23.08% of the $50.00 Group Expense to Class 1 also = $11.53. The same is true of all other expenses listed. I don't have a separate Vacation expense account; it is all tracked to my Labour expense account so is included in that amount.
Note that $960.00 went to Class 1 which is 23.08% of the total ($4,160 total wages). 23.08% of Vacation expense of $239.99 = $55.39. $960.00 + $55.39 = $1015.39 - exactly what is on the report under Class 1 for Labour Expense.
Total CPP & EI expense on this cheque was $303.32. $303.32 * 23.08% = $70.01 to Class 1. Same number as on the report.
I'm only doing these calculations to verify that the report has calculated correctly all amounts that you would have expected to be in each class. I apologize that on my original screenshots, I had neglected to change my EI Expense account to the 'CPP & EI Expense' account on the G/L, so the $95.48 of EI expense on the cheque had been going to Labour Expense account on the report. That has been corrected now and the report above is bang on. As long as you have your Other Payroll Item expenses hooked up to the correct G/L accounts where you want to see the expenses, any report you pull by Class for expenses will do exactly what you want it to. Hope that helps a little more
OK, now I see your issue. For some reason, QB has seen fit to allow 'Track Expenses by Job' with every other Payroll Item except the Deduction item. If I were you I'd use an Addition item instead, linking it to the G/L account you want, making it applicable to net pay only, and reverse the sign (+/-) in the entry. Then it will be classified like all the other item types.
I think this is definitely an issue for QB to fix . . . it makes no sense to allow Job/Class tracking on every single Payroll item type except the Deduction item. You shouldn't have to do it this way, but it is a workaround and will get you what you want.
Thank you. This works but is only is half a solution. A Negative Addition type Payroll Item cannot be created or added to an Employees' Profile. Each paycheque must be altered. Since we use a Payroll Service and not all of our employees subscribe to extended health - not to mention some choose not to pay ANY of the premium - it could very cumbersome and messy.