I have started a bonus program for our employees. It will accrue over time and be paid out at the end of the year, and is based on company profitability. I would like to have an account where the bonus's build up and can be tracked as payables, so our net income is not overstated. How can I set this up?
Your employees must be very happy with your bonus program, solarmatt!
QuickBooks has a preset Bunos item which is associated to the Payroll Expense account by default. However, if you'd like to create your own account, that would fine. I'll include the steps to assign it to the Bonus item.
Add Bonus item and create an account at the same time.
From the Lists menu, choose Payroll Item Lists.
From the Edit menu, choose Create new payroll item.
Select Custom Setup group and click Next.
Select the Wage groupand click Next.
Choose Bonus and click Next.
Optional: Click the drop down-arrow beside the default Payroll Expenses account and click <Add New> to create an account. Enter the account details and click Save & Close.
When you create paychecks, the bonuses will be posted to its assigned account which will show up in the Expense section of your Profit and Loss report. This is automatically posted as an expense against your company.
I'm just curious, could you provide more details about making the bonuses payable? We could change the setup for that.
On the other hand, I'm wishing you more success for your business for more bonuses to come. Let me know if you have questions.