Do I have to pay per diem through payroll?

dLearned · ‎February 07, 2022

We pay our employees a per diem when work requires them to be out of town overnight. We pay this in advance, usually in cash (from petty cash) but also occasionally by check.

In the past, these checks and payments were recorded as expenses or vendor checks, charged to a per diem account under Cost of Goods Sold.

The transactions were done selecting the employee as the payee.

Questions:

- is there a problem with doing it this way?

- as per diem is non-taxable, how is doing it through payroll better/different?

- should the employees be set up as vendors instead of using the employee name that shows in the drop-down under "payee"?

JasroV · ‎February 07, 2022

Thanks for sharing your concern with us, @dLearned.

No, there isn't a problem doing it that way. However, it is best to pay your employees per diem by adding it to their payroll. This way, you'll be able to keep track of your payroll taxes with ease. I'll show you how.

Go to the Payroll or Workers menu and then select the Employees tab in your QuickBooks Online (QBO).
Double click on your preferred employee.
Click the Pencil icon for Pay under the Employee details.
Scroll down, then click the + Add additional pay types (like overtime and sick pay) link under the How much do you pay this employee section.
Select Additional pay types, and choose the correct pay types for the per diem. You can choose Nontaxable Per Diem.
Click Save, then Done.

You can also check these links for more details about this process:

Once done, you can generate an unscheduled payroll to pay your employee per diem. I'd also recommend working with your accountant for additional guidance and to ensure the accuracy of your accounts.

Furthermore, I'm attaching this article that can guide you in filing your taxes seamlessly: Pay and file payroll taxes and forms in Online Payroll.

If you have any additional questions about paying your employees per diem or with your payroll, you can always get back to me. I'll be here to help you anytime!

View solution in original post

JasroV · ‎February 07, 2022

Thanks for sharing your concern with us, @dLearned.

No, there isn't a problem doing it that way. However, it is best to pay your employees per diem by adding it to their payroll. This way, you'll be able to keep track of your payroll taxes with ease. I'll show you how.

Go to the Payroll or Workers menu and then select the Employees tab in your QuickBooks Online (QBO).
Double click on your preferred employee.
Click the Pencil icon for Pay under the Employee details.
Scroll down, then click the + Add additional pay types (like overtime and sick pay) link under the How much do you pay this employee section.
Select Additional pay types, and choose the correct pay types for the per diem. You can choose Nontaxable Per Diem.
Click Save, then Done.

You can also check these links for more details about this process:

Once done, you can generate an unscheduled payroll to pay your employee per diem. I'd also recommend working with your accountant for additional guidance and to ensure the accuracy of your accounts.

Furthermore, I'm attaching this article that can guide you in filing your taxes seamlessly: Pay and file payroll taxes and forms in Online Payroll.

If you have any additional questions about paying your employees per diem or with your payroll, you can always get back to me. I'll be here to help you anytime!

dLearned · ‎February 09, 2022

Thank you! I think this is an option, and we will need to do a combination of two methods...For last minute trips, petty cash may be required, but when trips are planned, this can work as well.

DANITABOOBOO · ‎July 25, 2023

I DID THIS LIKE SUGGESTED AND SAVED IT, AND IT DOES SHOW UP PER DEIM NONTAXABLE BUT, IT STILL WON'T LET ME SAVE IT IN PAYROLL HISTORY BECAUSE THE NET DOESN'T EQUAL THE GROSS AFTER TAXES. ANY TIPS? I AM NEW TO QUICKBOOKS.

DANITABOOBOO · ‎July 25, 2023

I DID AS INSTRUCTED AND ADDED PER DEIM NONTAXABLE AND IT STILL WON'T LET ME SAVE MY EMPLOYEE PAYROLL HISTORY. IT KEEPS TELLING ME MY NET MUST EQUAL MY GROSS AFTER TAXES. ANY TIPS?

Mich_S · ‎July 25, 2023

I can only imagine your back-and-forth resolving your payroll concern, DANITA. I'm here to point you in the right direction so you can do this in no time.

While we appreciate your efforts to save your employee historical payroll in QuickBooks Online, contacting our Payroll team would be best. They can investigate further why the data won't be saved and guide you on what to do. Here's how:

Important: Please note the business hours to make sure experts are available to assist.

Log in to your QuickBooks Online company.
Go to Help (?).
Click on Contact Us.
Enter your concern, for example: "Can't save employee payroll history after adding per diem non-taxable." , then hit Let's talk.
Select a way to connect with us:

Start a chat
Get a callback

Additionally, you can choose your product and fill out the form to chat with an expert.

Here's an additional module you can browse the list of payroll reports, customize, print, and mark as a favorite in QBO: Run and manage payroll reports in QuickBooks Online Payroll.

Stay in touch if you need further assistance with your payroll or QuickBooks. I’m here to back you up. Stay safe always!

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Do I have to pay per diem through payroll?