QB Desktop: Setting up vacation accrual

If your goal is to always reach 40 hours per year, then calculating by hour worked isn't the best choice.

However, if you want to reach 40 hours assuming the employee works exactly 40 hours per week, then for the hourly accrual, divide 40 by 2080 hours (40 hours/week * 52 weeks).

Thank you, Can you help me understand why it's set up the way it is currently:

EVERY HOUR ON PAYCHECK 

Hours accrued per hour paid: 0:01:16

Thank you,

Can you help me understand the current method this company uses (I'm new)

Accrual period: Every hour on paycheck

Hours accrued per hour paid: 0:01.16

?

I’m here to share information on how QuickBooks handles the calculation of your employee's vacation, @dgoss.

In QuickBooks Desktop, vacation accrual depending on your paid time off policy. That means your employee's PTO calculation depends on how you set it up in the program or how it will accrue.

Let’s say 40 hours which is the most common hours of work per week. You can refer to the steps below on how it's calculated in the program:

1. Figure out how many hours your employee works in a year.
2. Multiply it with the number of weeks in a year.
   40 hours (Hours in 1 work week) x 52 weeks = 2,080 hours   
3. Subtract the number of hours amount allocated for PTO.
   

   2080 hours – 40 hours (Allocated PTO) = 2,040 hours

   2,040 hours – 40 hours (5 paid vacation days off = 40 hours) = 2,000 hours per year

4. Divide the number of allocated vacation hours by the total hours per year.

   40 hours (Hours in 1 work week) ÷ 2,000 yearly hours worked = .02 hours

By using the following calculation, it means your employee will earn .02 hours of PTO per day.

I’ve attached some resources that provide more information about vacation time:

• Set up and track time off in payroll
• Sick and vacation time incorrect or not accruing on paychecks

Let me know if you have any additional payroll questions or concerns. I'm always here to help you out. Have a great day!

Hi Madelyn,

Thanks for your response.  I'm so confused!  I am new to this company and yes our employee's get 40 hours per year of vacation time.

Currently one employee has mentioned that he's short vacation time accrued.

His profile is set accordingly:

Accrual period: Every paycheck (which I believe is wrong, everyone else's is set up as "Every hour on paycheck"

With Hours accrued by paycheck: 1:16

Any idea why it would be set up this way, I have no one here to guide me.  Thanks.

@dgoss 

RE: Thank you, Can you help me understand why it's set up the way it is currently:

No one here can do that.  If you don't know why, we certainly can't tell.

RE: our employee's get 40 hours per year of vacation time.

Then accruing time based on hours worked is not a good idea. The only way that will work is if they work exactly the expected hours: Never less and never more.

RE: Currently one employee has mentioned that he's short vacation time accrued. His profile is set accordingly:  Accrual period: Every paycheck ... with Hours accrued by paycheck: 1:16

If he accrues 1:16 hours every paycheck, then the only way he'd get to 40 hours in a year is if you paid him 31.6 times during the year, which would be quite odd.

If your goal is to always award employees 40 hours per year, then you should set them up using the "Per Paycheck" option and then award them an amount per check so that it works out to 40 hours per year.

For example, if you pay every other week, then divide 40 by 26 and enter 1:32 hours per check.

Or, if weekly, then divide 40 by 52 and enter :46 on the employee.

If emloyees get to accrue vacation from previous year into the next (expires in April) how do I set that up?

I'm here to help set up your employees time off in QuickBooks Desktop Payroll, @PO10.

You can enable the Reset hours each new year option to set up these employees' vacation time off. Then, set up reminders once April comes and adjust their accrual manually to accurately track their remaining and current hours.

Here’s how:

1. Click the Employees menu, then go to the Employee Center.
2. Select the employee name and click Edit.
3. Pay heed to Payroll Info, then tap Sick/Vacation.
4. In the Vacation section, select Reset hours each new year.
5. Enter the hours on the field.
6. Hit OK after.
   

Check out this article to learn more about tracking time off, vacation, and sick pay for your employees: Set up and track time off in payroll.

If their vacation time doesn’t accrue on paychecks in the future, you can use this guide to resolve them: Fix incorrect sick and vacation accruals in QuickBooks Desktop Payroll.

You can always reach back out if you have additional payroll concerns. Just let me know by adding a comment below. I'll get back to you as soon as I can. Have a good one!