You're on the right track, @TimJBaker.
Let me provide you with additional information on how service item works in QuickBooks Desktop.
Service Items are used to include charges for labor or professional fees that your firm buys or sells. When added as a line item in your invoice, it will reflect as Income in your Accounts Receivables. While payroll item reflects in your COGS account.
On the other hand, you're correct in saying that mapping the expense and income account associated to your payroll and service items needs to be done when you set up each items. So you'll be guided properly in mapping your accounts accurately, I'd recommend contacting your Accountant.
For more insights, you may check these articles:
Feel free to click the Reply button if you have other questions about using the service item in QuickBooks. I'm always here to help.
