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Level 3

Enter Employee Payroll hours & Pay against COGS account

Good afternoon,

  Not sure if this is easily possible, but here is my issue. 

I have 3 employees who work at our plant site.  They are union employees.

Each day they work, along with entering their time sheet (time out/time out), they must breakdown their hours into the below cost codes.   For example:

Cost CodeCost CodeCost CodeCost CodeCost CodeCost CodeCost CodeCost Code
101.1101.2202.1201.1203.1  101.3
5 hrs2.51     


None of the hours are actually "billable", nor do we have a "customer". I thought I could enter a phony customer, and when I fill in time, be sure not billable is checked (I'm  not going to invoice my own company).  However, if I don't do that, then there is no recording in COGS. 

Is there a workaround?


Look forward to your replies.


QuickBooks Team

Enter Employee Payroll hours & Pay against COGS account

Hello, @FMW.


The Cost of Good Sold (COGS) will only be realized when the item is being sold out. Since the employee's time isn't billable, then there's no way to show payroll under COGS. As a workaround, you can create a new hourly item and track it under COGS so it'll not affect the other hourly item.


Here's how:


  1. Select Payroll Item List from the List menu.
  2. From there, click on the drop-down arrow beside Payroll Item.
  3. Click New, then Custom Setup.
  4. Tap Next.
  5. Choose Wage under Payroll item type, then Next.
  6. Pick Hourly Wages under Wage, then Next.
  7. Click Regular Pay, then Next.
  8. Enter the name for the item, hit Next.
  9. Under Expense account, select Cost of Good Sold.
  10. Hit Finish.

Once completed, use that item when creating time-sheet.


Just in case you need additional information about COGS, check out this article.


Post again if you have any other questions. I'm a few clicks away to help. Have a good day!

Community Champion

Enter Employee Payroll hours & Pay against COGS account

Here is a possible workaround. Without adding payroll items, add a Service item at a zero dollar charge. Using Classes add a Class for each code. Using timesheet entry enter the service item, the pay type (probably hourly wage) and the daily hours each day. Do this prior to payroll and the class (codes) will post to each employees payroll calculation. Generating a P&L by class for these codes and filter for just payroll items might give you enough reporting.


If that is not enough then you could enter a dummy customer and make the time billable. Since the service labor item has a zero rate when you create an invoice and add time the invoice will be for zero.


Another trick is in timesheet entry, use the memo field and label the employee. Billable labor will bring in the hours but not by employee unless you use the memo field. Then if desired you could create the zero dollar invoices by employee. Hope this helps

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