We just switched from desktop to online. I have entered all the YTD totals for employees, but can see no way to enter accrued vacation pay YTD? Using standard payroll.
Welcome to the QuickBooks Online family! I hope you're enjoying the added simplicity to your bookkeeping and the convenience of the cloud-based platform. I'm glad to see you've already made a lot of progress in setting up payroll. Entering vacation accruals only takes a moment. I can show you how.
Vacation balances are entered with your employees' time off policies in question 5 of their profile. It just takes a few easy steps to update it:
Head to your Employees tab and select the employee in question.
Click on Edit employee and scroll down to part 5.
Choose or create a policy to accrue vacation, then enter their current accrual balances in the appropriate boxes.
If you're having trouble finding these boxes, an agent from our team of payroll specialists would be happy to enter in on our end. Choose from the following options to get in touch.
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Unfortunately, QBO does not track vacation properly. There are quite a few threads about this in the Q & A archives which outline the problems with vacation. If you search for Vacation, you will no doubt find them. I have posted at length about this and the best we can hope for is that Intuit says it's fixing the problem and will let us know.
How does QBO handle vacation, you might ask? For one, it tracks hours only and not $, which is problematic as you cannot always draw a straight line from hours to $, especially if an employee has worked OT, has had a pay rate increase, or has ever taken lump sums of vacation pay. Next, it only recognizes Vacation expense when an employee takes vacation. That's right - there is no financial entry made to accrue vacation pay to a liability nor to an expense in the pay period in which it happens. Rather, it creates a little report that supposedly tells you how much you owe the employee in vacation pay, based on hours only. But it is just a report, and not necessarily accurate for some of the reasons mentioned above. Vacation pay can be pretty complex and QBO dumbed it down so badly that it is near useless.
I'm afraid that when you set up your accrued vacation available in QBO, you have no other choice but to take the $ amount currently owed to the employee and divide it by their current hourly rate to get the number of hours to enter as a YTD figure.
Here is the thread where this was all brought to light:
Until they make a fix, if you want to track the liability, you'll have to do it manually with JE's each month or each pay period. This is the advice I gave in another post regarding this:
Until QBO incorporates this essential functionality re: Vacation Payable, you can use QBO's vacation reports to get the numbers you need to make the JE yourself.
DR Vacation Expense (vacation earned/accrued in the period)
CR Vacation Liability (same amount as Vac expense)
Since QBO automatically debits the vacation expense at the time someone takes their vacation, you will have to make the following entry to ensure that vacation expense isn't recorded twice, and vacation liability (from above entry) is reduced:
CR Vacation Expense (to offset the automatic DR QBO makes when paying out vacation pay)
DR Vacation Liability (to reduce the liability by amount of vacation taken)