Backpay for employee

FMW · ‎October 08, 2020

Hello,

An employee was supposed to have received $1.85/hour pay increase since July 1. Has been paid correctly since Sept 1 2020; however, I need to pay him for all the hours he did not receive $1.85 increase (392 hours X1.85).

What is the best/proper way to do this? Create a weekly check for each of the weeks that was missing his increase (approximate 8 weeks), or just a lump sum check? How to enter this properly in QB desktop.

Thanks again.

JasroV · ‎October 08, 2020

I appreciate you for sharing the details with me, @FMW.

Allow me to share some insights on how to properly record this in your QuickBooks Desktop (QBDT) software.

You can create a payroll item for the total amount of hours increase to your employee. Then add the payroll item when paying your employee. Let me show you how.

Go to Lists menu, select the Payroll Item List.
From the Payroll Item drop-down arrow select New.
Select Custom Setup and click Next.
Choose Wage then select Next.
Select Commission and then click Next.
Enter the name of the item and then click Next.
Choose an Expense account where you want to track wages.
Enter the total amount of the hours for your employee (392 hours x $1.85).
Then click Finish when done.

I also recommend consulting with your accountant for guidance in recording this. This way, we’ll ensure your accounts are well accounted for.

Once done, adjust the hourly rate of your employee to the current hourly rate. This way, the gross pay is calculated correctly. Then, run payroll for your employee and ensure to add the payroll item created above.

Also, you can either use a lump sum check depending on the agreement between you and your employee. You can read Step 3: Create paychecks section in this article and choose QuickBooks Desktop for the details: How do I create a paycheck for an employee?

Additionally, I have here an article that you can use for reference and lets your employee view their pay stubs online: Invite your employees to QuickBooks Workforce to see pay stubs, W-2s and more

If there’s anything else you need help with in managing your payroll, you can always tag me in. I’ll be around to help you. Have a great day ahead!

View solution in original post

JasroV · ‎October 08, 2020

I appreciate you for sharing the details with me, @FMW.

Allow me to share some insights on how to properly record this in your QuickBooks Desktop (QBDT) software.

You can create a payroll item for the total amount of hours increase to your employee. Then add the payroll item when paying your employee. Let me show you how.

Go to Lists menu, select the Payroll Item List.
From the Payroll Item drop-down arrow select New.
Select Custom Setup and click Next.
Choose Wage then select Next.
Select Commission and then click Next.
Enter the name of the item and then click Next.
Choose an Expense account where you want to track wages.
Enter the total amount of the hours for your employee (392 hours x $1.85).
Then click Finish when done.

I also recommend consulting with your accountant for guidance in recording this. This way, we’ll ensure your accounts are well accounted for.

Once done, adjust the hourly rate of your employee to the current hourly rate. This way, the gross pay is calculated correctly. Then, run payroll for your employee and ensure to add the payroll item created above.

Also, you can either use a lump sum check depending on the agreement between you and your employee. You can read Step 3: Create paychecks section in this article and choose QuickBooks Desktop for the details: How do I create a paycheck for an employee?

Additionally, I have here an article that you can use for reference and lets your employee view their pay stubs online: Invite your employees to QuickBooks Workforce to see pay stubs, W-2s and more

If there’s anything else you need help with in managing your payroll, you can always tag me in. I’ll be around to help you. Have a great day ahead!

NewbyQy · ‎January 31, 2023

This is great! Can I follow these same steps for the online QB version?

Rasa-LilaM · ‎January 31, 2023

Let me share an alternative solution for creating a backpay for your employee, NewbyQy.

The ability to retroactively add a raise to your employees' paychecks is currently unavailable in QuickBooks Online (QBO). As a workaround, you can create an additional payment type under each profile and include it in their next payroll with the total increase accumulated.

Let me help and walk you through the steps. Here's how:

In QBO, head to the Payroll menu on the left panel and choose Employees.
From the list, look for the worker's name and click on it to view more details.
In the Pay types section, click Edit and then press the Common pay types link.
Then, Mark the Other Earnings box change the name, like Accumulated Raise.
Tap the Save button to save the changes.

For more in-depth information, take a look at this article: Add or Change Pay Types in Online Payroll. Then, choose QuickBooks Online Payroll.

You can also bookmark the following link in your browser for future use: Payroll Hub. It covers a variety of topics such as processing payroll forms, managing your employees' data, dealing with tax notices, and so on.

If there’s anything else you need help with in managing your payroll, you can leave a comment below and tag my name. I’ll be around to help you. Have a great day ahead!

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