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Frequent Explorer *

Allocating Payroll Taxes To Classes

We use 4 classes to track payroll expenses (00, 10, 20, 30).  Employees enter time in TSheets by class and that information is brought across during payroll processing.  The issue is that employer payroll taxes (Social Security, Medicare, Unemployment) are being recorded as uncategorized instead of the class that the employee's wages are categorized.  Is there a way to fix this?

 

In addition: an employee could have time in multiple classes in a given payroll period ...

 

 

Solved
Best answer 04-19-2019

Accepted Solutions
Moderator

Re: Allocating Payroll Taxes To Classes

I appreciate you getting back to us, @Nate5.

 

Allow me to chime in and share some clarification about allocating payroll taxes to classes in QuickBooks Desktop (QBDT).

 

If you created a journal entry to allocate items to classes, you wouldn't need to delete them. Selecting Items on the Assign classes to option in the Preferences will not affect your historical transactions. This will only allow the option to assign a class to payroll items or to entire paycheck and will take effect moving forward. You can always change it within the transactions.

 

You can always go back to the article provided by my colleague @PreciousB above for further guidance.

 

This should answer your concern for today. Please mention me in the comment section if you have any additional questions. I'll be happy to help. Have an amazing weekend.

22 Comments
Frequent Explorer *

Re: Allocating Payroll Taxes To Classes

So very sorry to hijack this thread.   Does anyone know where to ask a new question?  When I sign in, there is no button anywhere for a new message or question.

 

Thanks

 

Back to our regularly scheduled program....

 

Chris

QuickBooks Team

Re: Allocating Payroll Taxes To Classes

I appreciate your time checking this with us, NateBoyle.

 

I want to make sure I provide you the right resolution, I only need a few more information about the issue. 

 

Once you create a paycheck, there's only one option to assign a class, and it should affect both employee and employer's payroll taxes. 

However, if the transaction doesn't have class, it will show as Unclassified


May I know what report did you pull up? Also, when you say the "employer payroll taxes are being recorded as uncategorized", are you referring to the uncategorized account in the Chart of Accounts?

 

Any details you can provide is extremely helpful for us to narrow things down would be appreciated. I'll be around to help. 

QuickBooks Team

Re: Allocating Payroll Taxes To Classes

Hi there, ChrisBe.

 

It seems like you've already found out on how to add a question here in the QuickBooks Community.  I've already responded to your concern, please check this link: https://quickbooks.intuit.com/community/Other-questions/Customer-column-on-Purchase-Order/m-p/281151

 

Wishing you and your business continued success. 

Frequent Explorer *

Re: Allocating Payroll Taxes To Classes

Thank you for your reply.

 

The payroll tax expense items i'm trying to put into classes are currently unclassified but are recorded into an expense account in the chart of accounts. 

 

For example, Employee 1 is paid $1,000 and that gross pay is charged to Payroll Expense, class 10.  The associated employer payroll tax expenses (social security, medicare, unemployment etc.) are charged to Payroll Tax Expense, "unclassified".  I would like those payroll tax expense items to follow the related payroll expense and have them classified to Class 10. 

 

Does this make sense?

QuickBooks Team

Re: Allocating Payroll Taxes To Classes

Greetings, NateBoyle.

 

Allow to join this discussion and ensure your payroll tax expenses are classified correctly.

 

First and foremost, I'd like to thank you for the additional details that you provided. I'm happy to tell you that it does make sense and I have just the steps that'll help set this up in QuickBooks.

 

To give you an overview, we will need to change your Payroll & Employee preferences to assign a class to the entire paycheck, instead of just the payroll item. Here's how you can do it:

  1. From the Edit menu, choose Preferences.
  2. Select Payroll & Employees in the left panel.
  3. Go to the Company Preferences tab.
  4. Choose the Entire paycheck option in the Assign one class per section.
  5. Click OK.

From there, you'll need to open your employee's paycheck and reassign the correct class to apply it to the payroll taxes. The steps below will guide you through the easiest way on how to do it:

  1. From the Employees menu, choose Employee Center.
  2. Select the employee's name.
  3. In the Transactions tab at the lower left, double-click the paycheck.
  4. Click the Paycheck Detail button.
  5. Choose the correct class from the Class drop-down menu at the top right.

 

That should do it. With these resources, I'm confident that you'll be all set with your payroll tax expenses.

 

Please let me know if there's anything else I can do for you. I've got your back and am always willing to help. Have a great day!

Frequent Explorer *

Re: Allocating Payroll Taxes To Classes

Thank you very much for such a thorough explanation of this solution.  I applied the changes you've suggested and conclude that what I'm looking for is more detailed than this solution.

 

We have employees who have their time charged to multiple classes in a pay period. As a result, the solution you've suggested doesn't allow me to charge their wages accordingly. 

 

What we had been doing allowed us to charge their wages correctly, but their wages taxes did not "follow" their wages. Does that make sense? I am trying to find a way to have their wages taxes charged to the same class as their wages, even when their wages are charged to multiple classes in a pay period.

 

 

QuickBooks Team

Re: Allocating Payroll Taxes To Classes

Good to hear from you again, NateBoyle.

 

You're most welcome and I also appreciate you taking the time to post this and letting me know.

 

Rest assured, the additional details that you've mentioned do make sense. That said, I did some testing and found that in order to achieve your goal, you may need to create separate paychecks for each of their wages while using the option that I previously suggested.

 

At this time, the Class feature is mainly used to track job costs for your company. That's why it doesn't seamlessly flow into your Payroll Liability Items (such as the taxes) even after the right classes were assigned to the wages.

 

Keep me posted how else I can help you succeed with QuickBooks. Thanks again for reaching out, I look forward to hearing from you again.

Community Contributor *

Re: Allocating Payroll Taxes To Classes

This has a been a very useful thread for me to follow.  The last response, while not ideal, at least tells me the final option so I know I don't need to continue beating my head against the wall to get the software to do what it doesn't.

 

Though in my case, the first solution of assigning a class to the entire paycheck was all I needed.

 

Thanks!

Community Contributor *

Re: Allocating Payroll Taxes To Classes

I take it back.  I tried to implement this last night and found that these options were already selected.

 

One thing that I think may be causing it, is that in my prefences where you can tell it to use classes or not, it has the option 'Assign Classes to...'.  In that option, Names is selected.  I don't know if that means employee names or customer names or something else.  But it seems that wherever I have a customer name that has a class - whatever that class may be - that's when the payroll taxes are getting classed.  If the customer has no class, it won't pull in the paycheck class in either.

 

If I go in and make sure every customer and job have a class... maybe that will work...?  Or maybe I should uncheck the box that says Assign Classed to...

Moderator

Re: Allocating Payroll Taxes To Classes

Thanks for providing more details about your concern and a screenshot, Nate5.

 

You're in the right direction of tracking payroll by class. I'm here to guide in making sure you can assign one class for each earnings item on a paycheck.

 

To do this, select Items under the Assign classes to option. This will let you see the class break down for company-paid payroll expenses for salaries, hourly wages and payroll taxes by class.

 

Here's how to set the company preferences:

  1. Go to the Edit menu, then choose Preferences.
  2. Select Accounting, then choose Company Preferences.
  3. Choose Items beside Assign classes to.
  4. Click OK.

image.png

 

To identify how payroll expenses are distributed to each class, use this formula:
[Rate X # of hours]/ Total wages = percentage/rate of the proration for each Class

 

Once you created paychecks with classes per item, run the Payroll Summary report and sort it by employee or class.

 

Let me show you how:

  1. Go to the Reports at the top menu bar.
  2. Under Employees & Payroll, choose Payroll Summary.
  3. Choose Class or Employee beside Show Columns.
  4. Click Refresh.

image.png image.png

 

I'll share this article too for the complete details: Tracking payroll expenses by class, department, or location.

 

That information should get you back in order. I'd like to make sure that you're able to resolve this concern, so please let me know how that works for you. Best regards.

Community Contributor *

Re: Allocating Payroll Taxes To Classes

Hi PreciousB.  Thank you for that.  I think that's exactly what needs to happen but I haven't made the change yet.  Do you know if, once I make the change, it will affect historical transactions?  Or will it only affect new transactions?

Moderator

Re: Allocating Payroll Taxes To Classes

You're most welcome, Nate5.

 

I'll add some details about the class tracking in QuickBooks Desktop.

 

The paychecks and reports change based on the option you selected in the Preferences screen. After choosing items in the Assign classes to drop-down, the previously created paychecks would show a breakdown of company-paid payroll expenses.

 

That information should get you back in order. Let me know how that works for you. I’d be glad to help if you have other questions while working in QuickBooks. Enjoy your day.

Community Contributor *

Re: Allocating Payroll Taxes To Classes

So... if we've made journal entries for the past year to allocate items to classes, making this change would mean those Journal Entries now throw everything off and will need to be deleted, right?

Moderator

Re: Allocating Payroll Taxes To Classes

I appreciate you getting back to us, @Nate5.

 

Allow me to chime in and share some clarification about allocating payroll taxes to classes in QuickBooks Desktop (QBDT).

 

If you created a journal entry to allocate items to classes, you wouldn't need to delete them. Selecting Items on the Assign classes to option in the Preferences will not affect your historical transactions. This will only allow the option to assign a class to payroll items or to entire paycheck and will take effect moving forward. You can always change it within the transactions.

 

You can always go back to the article provided by my colleague @PreciousB above for further guidance.

 

This should answer your concern for today. Please mention me in the comment section if you have any additional questions. I'll be happy to help. Have an amazing weekend.

COA
Active Member

Re: Allocating Payroll Taxes To Classes

Perhaps your solution would work but I do not have the same options as you. Specifically, I do not have the check box, line, nor dropdown "Assign Class to" as shown in your image. I am using QBDT Premier Plus Edition 2018. Perhaps they removed some options?

 

BTW, thank you for uploading images because they help a lot.

Moderator

Re: Allocating Payroll Taxes To Classes

Thank you for joining in the discussion, @COA.

 

Allow me to step in and help share some information about assigning classes in QuickBooks.

 

The option to assign classes to accounts, items, and names is only available using QuickBooks Enterprise. Since you're using Premier Plus, you can still use class tracking for transactions but the option to select which to assign classes is not available.

 

 

Just in case you need other references in the future, you can always check out our site: Help articles for QuickBooks Desktop.

 

Let me know if you have additional questions about tracking classes. I'll be here to help however I can.

Experienced Member

Re: Allocating Payroll Taxes To Classes

Hello. I have a similar situation to what has been described here. I have an employee whose paycheck needs to be split up to two different classes. But in order to do that I have to uncheck that box in preferences that assigns the class to the entire paycheck. So now her taxes will most likely not be classified. If I choose this option to create two different paychecks for her, how can I do that when I run payroll? It seems to only give an option to run one paycheck per employee.

Thanks

QuickBooks Team

Re: Allocating Payroll Taxes To Classes

Hello there, NSbookkeeper.

 

In your situation, you will need to create a scheduled and unscheduled payroll for the specific employee. Then, toggle the class for each paycheck.

 

I've added a sample screenshot for your reference:

 

Please let us know if there's anything else you need. Thanks.

Experienced Member

Re: Allocating Payroll Taxes To Classes

Thank you for the response. If I decide instead to just run one paycheck for her allocating everything to one class, is there a simple way to edit her payroll transaction after payroll has been run so that I can just split her payroll items then?

Moderator

Re: Allocating Payroll Taxes To Classes

Thanks for getting back to us, @NSbookkeeper.

 

Currently, QuickBooks doesn't have the option to edit or split the payroll items after payroll transaction has been run.

 

Just to verify, are you trying to assign classes to your employee's earnings? If so, you can change the Preferences to assign one class per earnings items instead of creating two paychecks.

 

To change the Preferences:

 

1. Go to the Edit menu, then Preferences.
2. Select Payroll & Employees on the left pane, then Company Preferences tab.
3. Choose Earnings item on the Assign one class per section.
4. Hit OK.

3.PNG 4.PNG

 

On the other hand, if you need to assign one class for the entire paycheck, I highly suggest following the steps provided by my colleague above to create a scheduled and unscheduled payroll for the specific employee.

 

For additional resources, consider checking out this article and scroll down to Set preferences for tracking payroll using classes section: Tracking payroll expenses by class, department, or location.

 

That should answer your concern for today. Please let me know how everything goes by leaving a comment. I'll be here if you have any follow-up questions. Have a great weekend.

Experienced Member

Re: Allocating Payroll Taxes To Classes

ok thank you. If I assign one class er earnings item as in your photo and then split up her check into two separate classes, will all the associated taxes that are being taken out of the check also split to those classes accordingly?

Moderator

Re: Allocating Payroll Taxes To Classes

Thanks for the follow-up, @NSbookkeeper.

 

Allow me to step in and help share some information regarding the classes allocated in the paycheck.


Currently, assigning payroll taxes to classes isn't available when running payroll. However, you can assign it to each earning item as my colleague @FritzF has mentioned. QuickBooks will then calculate the tax portion depending on the earnings' amount.

 

To identify how payroll expenses are distributed to each class, use the formula: [Rate X # of hours]/ Total wages = percentage/rate of the proration for each Class. 

 

Here's how you can generate a report for payroll broken down by class:

 

  1. From the QuickBooks Reports menu, choose Employees & Payroll Reports. And then choose Payroll Summary.
  2. Select Customize Report on the report button bar.
  3. From the Column drop-down list, select Class.
  4. Make any other changes to the report. Then select OK.

For additional payroll references, you can check for future use, you may visit this helpful link: Payroll for QuickBooks Desktop.

 

This should answer your concern for today. If you have other questions about payroll classes, please don't hesitate to reach out again. I'm here to help.