Is it possible to bank overtime?

Hi kbell,

Thanks for the details for what you're trying to do with the overtime pay in your QuickBooks Desktop company file. The Payroll feature has a lot of options that will allow you to get your hands dirty configure things as you need. Regarding overtime payments, however, it's a fairly simplistic and straightforward approach. With that simplicity comes limitations and in this case recording the overtime in one area while accruing it in another isn't possible.

Others in our community may have some idea to help out with this kind of situation, and I encourage them to chime in. Working together in this way, we're able to find solutions to these kinds of questions!

If you'd like to speak with someone from our team directly to discuss this scenario and ask more questions, please feel free to call our phone support team at 1-877-772-9158. Pro and Premier support is available 24 hours and Enterprise support can be reached from Monday to Friday between 9 a.m. and 8 p.m. EST.

Take care! You're welcome to stop by again if you have other questions. :)

Yes, it's possible.  It takes a couple of extra steps, but works very well for me.

As you know, the Bank Hourly payroll item is native to QB and is what is used to accrue hours for each employee.  But to accrue hrs way QB would like you to, which is to manually enter the hours in the employee's payroll record in Payroll Info - Accrual Hours is cumbersome.  I use the following workaround.

The Bank Hourly Item, which when used, only records Bank time that is paid out in any given pay period, and reduces any accrual hours you may have, which are positive.

1. Create a payroll item called something like 'Bank Hrs Accrued', and link it to the same wage expense account as your regular hourly item.
2. Create another payroll item called something like 'OT Bank Differential', 
3. When entering overtime into the timecard, enter the regular hours as you normally would
4. Tab down to the next line, and use the PR item 'Bank Hrs Accrued', for the exact number of OT hours the employee worked.
5. Tab down to the line below that, and use the PR item 'OT Bank Differential', and enter the OT multiplier of the OT hours worked.  For example, if the employee worked 2 hrs of overtime, enter 1 hr in the differential item (based on 1.5 OT rate).  If the rate is different, use that rate.  For example, double time, you would enter 2 hrs of OT and then 2 hrs of OT differential, etc.
6. At the time of creating pay cheques, whatever number of hours are in 'Bank Hrs Accrued' and 'OT Bank Differential', you will make a negative entry to the QB native PR item 'Bank Hourly Rate' (you may have named it differently)
7. Note that while in 'Review Pay Cheque', as soon as you enter the negative 'Bank Hourly Rate' item, the Bank Avail (HR) at the top right of the pay cheque, now shows a positive number of Bank hours available.
8. Conversely, when employees take time off and indicate they want to use their banked time, simply enter the 'Bank Hourly Rate'  PR item into their timecard for that day.  When you review their next pay cheque, the Bank Available (Hrs) will be reduced by the time taken as Bank Time.

When you are pulling reports and only want to use the OT hours, you can filter the report to exclude the 'OT Bank Differential' item and only use your regular OT Hourly item and the Bank Hrs Accrued item, to get the actual number of OT hours worked.

*Note that when accruing bank time this way, the area on the Paystub which has an 'Earned' column and 'YTD Used' column, will be invalid info.  Only the 'Available' column will be correct.  If you choose the more cumbersome method, which is to keep track of all of the OT hours that someone wants to bank and manually enter them each period into the Accrual Hrs area of the employee's PR profile, then those columns would be correct.  But if you have many people to pay and track bank time for, the method above works very well and is much quicker because the pay cheque is populating entirely from the timecard, except for the one line entry you will make on the pay cheque to 'accrue' the banked OT hours.

This is how i record banked time ie employee dave that works very well for m

dave worked 50 hours but only wants to get paid for 45

post to time sheet 

labour hourly 50 hours job hospital 

this put the time in the system to bill out to the customer 

general ledger side of things 

created an accrued liability "daves accrued wages" 

at any time you can look at this account to see how much in wages he has accumulated 

payroll item 

create a payroll item BANKED DAVE and have it post to the accrued liability account "dave accrued wages"

employee under employee centre

add BANKED DAVE $17 as a payroll item 

make it so vacation pay to be calculated on this

pay cheque

labour hourly 50 (payroll item) $17 (from the time sheet) 

labour banked dave (payroll item) -5 $17 (this will post to GL accrued liability account "dave accrued wages"

hours for pay cheque equals 45 hours

amount will calculate on the pay stub ...showing a negative on the paystub as employee has a credit

note - if his pay cheque is 43 hours post this to the time sheet

labour hours 43 (payroll item) $17 

labour banked dave 2 hours $17 

when you create your pay cheque it will use the 2 hours from the banked 

I love puzzles and this was a fun one to figure out ... tested it and it works

wendy

@WENDY81 thanks for your post - we're new to QB Desktop and we are having the same issue.  So new that we haven't actually sync'd our time from QB Time yet for the first time.  24 hr operation with over 50 staff could make a big mess very quickly so I'm trying to sort out how to do this right the first time. 

Your solution seems remarkably simple - I have 2 questions though:

1) would you have to have a separate account for each employee to record their banked rate?

2) This might seem obvious but I've had numerous QB support techs tell me that manipulating the hours paid on the paycheque as you are describing will alter the billable entries that were imported - of course we don't want to mess with the bills.  It seems as though you are confirming that hours paid on paycheque are separate from billable time entries when you perform this function?

1.) yes i have an accrued account and a payroll banked account for each employee

2.)  I always post the hours to the job for the pay period correctly...  i forgot to add i have a customer called Office banked hours , service item labour and payroll item banked hours "employee" when posting to the time sheet and mark it is not billable time.  The customer Office banked hours gets the changes and not the customers themselves  ...i hope i answered your question     

Also i could not get the opening balance to post to to the pay cheque stub for january 1 without affecting the employees payroll income ...working on that so it will show correct on the pay cheque which means no one always asking me how many banked hours do i have. (until jan 1 i did it on an excel spread sheet)

Hello @cbandrew ,

See my post above in this thread for detailed instructions on how to bank overtime using Quickbook's native Bank Hourly payroll item (I believe I have attached screenshots as well).  By making correct entries into the time sheets, and then making a small adjustment on each paycheque, the Banked Hours Available will show up on every pay cheque.  You can still track it separately in a spreadsheet if you want to, but QB will do it for you using my method.

Also, just ensure you check your province's legislation regarding banked OT.  In my province, OT is OT, whether you get it paid out or whether you want to bank it.  e.g.  1 hour of overtime worked = 1.5 hours of banked time, which can be taken at a later date.  Now this is for "authorized" overtime.  If it is simply "flex" time, where an employee wants to work extra time to be able to take time off at a later date, then even so, most provinces require a special modified work arrangement agreement, showing a set schedule of when the employee(s) will work the extra hours, and when they will get the time off. e.g.  employee is scheduled to work four 10 hours days per week, and gets 3 days off per week.

Unfortunately, most provinces legislation do not allow employees to work extra time willy-nilly here and there so they can take time off when they want to.  The reason the legislation is so strict about this is because when employers allow their employees to work extra hours at straight time to take the same straight time off, sometimes when those employees quit they go to Employment Standards and make a claim for unpaid overtime and say that they worked all these extra hours but they never got their time-and-a-half for it.  Ten to one, the employee wins the claim, because there was no employment standards agreement in place to allow for the modified hours.

Hope the method works for you . . . good luck!

Thanks @Rochelley 

We do have a carefully constructed OT agreement that is making this a bit harder but it was put together in cooperation with our staff at the time and they don't want it scrapped or I would have abandoned it after the 8th support call with QB.  I had reviewed your post specifically on 2 of them and support techs don't seem to understand it at all so they have steered me away from it.  I do understand it and have your attachment - it's thorough and I should be able to execute that easily enough but my call ended in frustration at days end yesterday when no one could confirm for me whether the "Banked Hourly" payroll item you describe as being "native" to desktop is something we are supposed to have.  Either way we do not, but seeing the post responded to out of the blue this morning and having real time access to not 1 but 2 people successful at making this work despite the numerous tech support calls telling me to just use the program as it's designed (no thanks) I have hope... perhaps you could tell me a bit more about this Banked Hourly account that your version has (linked accounts and setup details) so that I might recreate it in it's absence from mine??  I assume you are using QB Desktop Enterprise in Canada?  We have somehow wound up with a contractor version of some kind but are using Desktop/Enterprise, and we are a contracting company, but there have been a few of these nuances that have simply been chalked up to "it must be just because it's contractor edition" so I assume this is one of those...  any help would be great.  I think if I can make that banked hourly account I should be able to follow your lead.

Hi @cbandrew ,

I think I know what's going on.  Unfortunately, this is something QB is not very good at articulating.  There are several native QB payroll items that work as accrual items; meaning you can add and subtract from that accrual using the items themselves.  They are:

The Sick Hourly Rate is the only PTO item in Quickbooks desktop that will track accrued time off and time paid.  Unfortunately, you would have to choose between using it for accrued sick time, or accrued bank time or any other type of accrued time off your employees may be entitled to, but you cannot track more than one (boo!).

In my shop, OT bank time is much more heavily used than sick time, and difficult to track.  Therefore I have chosen to use that accrual item for Bank Time.  You simply change the name of the item to Bank Hourly Rate.

Secondly, you would then go to Edit-->Preferences-->Payroll & Employees-->Company Preferences (tab)-->Printing Prefences-->On Pay Cheque Vouchers and Paystubs, Print-->Sick used and sick available-->Ensure box is checked and change the "Print as" Box to Bank (hrs).

Once you have done these, then you can use the method I outlined previously, but you will still need to create the other two items used to track bank time; a Bank Time Accrued item and an OT Differential Bank Time item.  The reason I track it this way is so I can pull reports on only the time that is actually worked by an employee, as there are several agencies e.g. ROE, Apprenticeship Boards, etc. who need to know actual hours worked, not necessarily all hours paid.

As in my method described previously, the hours of OT worked would be allocated to the Bank Time Accrued item and the OT multiplier would be allocated to the OT Differential Bank Time item.  e.g.  employee worked one hour OT (Bank Time Accrued) and is entitled to time and a half for that hour so .5 hours would be entered under that to OT Differential Bank Time.  When these transfer into the paycheque, if the employee is banking those hours, they need to be deducted from the paycheque and put to the one and only item that can track them, and that is Bank Hourly Rate, entered as a negative.  It sounds backwards, but it really isn't because of what is happening in the accounts in the background.  Just think that positive Bank Hourly Rate entries takes away from bank time available and negative Bank Hourly Rate entries adds to bank time available.

The check and balance for this time can be done two ways; one, open the individual employee's payroll record and go to Payroll info-->Accrual Hours.  The Hours available as of 'date' should be the current bank hours balance for that employee.

I also check it with a custom report which reports all the ins and outs of the bank time actually accrued and paid out on pay cheques.  The bottom line should match what is in the Accrual Hours section of the employee's payroll record.  I started with a Custom Transaction Detail report, displaying the following columns:  Num, Date, Source Name, Payroll Item, Type, Qty, Amount & Balance.  Then I filtered for the payroll item Bank Hourly Rate, and total by Employee.  Always leave the From date blank, and put in your ending date.  As this is an accrual item, it is always tracked from the very beginning.  As soon as you put in a date range with a beginning date and an end date, you will only get data from that date range, and the resulting balance will not be the "current" running balance.  That's fine if you only want to know a balance for a certain month or year.

I know it sounds like a lot, but the painful part is wrapping your head around it at the beginning and getting it working for you.  Once you get those items set up, and the custom report, tracking it is a breeze.  Let me know if I can help you any further.  I'm an old dog but I'm always learning new tricks, on top of having used this software since it's very inception, over 35 years.  There's not much that I can't make it do; even if it doesn't want to do it nicely on it's own; I'm the queen of Quickbooks work-arounds. :)  Good luck!

Do this work for Quickbooks online?

My guys want to be able to see how many banked hours they have, I am not sure how to do this.

Help would be awesome.

Hi Cmattie,

Thanks for chiming in on this thread.  Welcome!  QuickBooks Online Payroll currently doesn't offer the option to track banked hours.  If you'd like to see this moving forward, you can submit a request to our Development Team.  In the interim, you'll need to track the hours outside of QuickBooks.

Please feel free to reach out again, if you have other questions.  We'd be glad to assist!