Track payroll expenses by classes and projects in QuickBooks Online Payroll

Learn how to categorize your payroll expenses into different classes and projects when you run payroll.

In QuickBooks Online Payroll Premium or Elite, you can allocate your payroll expenses by classes (your business’s departments, product lines, locations, etc) and by projects (jobs, customers, etc) as you create your employees’ paychecks. 

These breakdowns will show on your Profit and Loss reports. You can use them to get deeper insights into specific parts of your business.

Note: Paychecks dated July 9 - August 27, 2024 might be missing classes. Find out how to fix this.

Step 1: Assign classes and projects on your employees’ paychecks. 

1. Turn on and set up class tracking and project tracking (if needed). 

Note: When you turn on class tracking, select One to each row in transaction, to add multiple classes for each employee. 

2. Go to Payroll, then Employees.
3. Select Run Payroll. 
4. Create your paychecks as normal. 
5. Select Edit classes and projects. If you only see Edit projects, go back to Step 1 to set up class tracking. 
6. Select the class and project for each employee and each pay type used.
   • For salaried employees, enter the percentage spent on each class or project. 
   • For hourly employees, enter the hours for each class or project.
   • For commission and other pay types, enter the dollar amount for each class or project. 
7. If needed, select Create ⨁ to add more classes or projects to each employee’s pay type. Or select Delete to remove them. 
8. When finished, select Confirm. 
9. Send your payroll as normal. 

Step 2: Run your Profit and Loss reports

1. Select Reports. 
2. From Find report by name ▼ dropdown, enter Profit and Loss by Class or Profit and Loss by Customer.
   • Profit and Loss by Class includes your total payroll expenses for each class you selected.
   • Profit and Loss by Customer includes your total payroll expenses for each project or customer you selected. 
3. Select the Report period ▼ dropdown, and select your desired date range. 
4. Save your reports as needed. 

Fix paychecks missing classes

Fix paper checks only

1. Go to your Paycheck list.
2. Update the date range to July 9 - August 27.
3. Select Edit on a paycheck.
4. Add the class to your paycheck.

Fix direct deposit checks

This will also work for paper checks.

1. Create a journal entry for each paycheck. Add the amount of the paycheck as both a debit and credit transaction. Use your Payroll expense account for both transactions.
2. Add the desired class to the debit transaction only. Leave the credit transaction unassigned.
   • This prevents your Payroll expense account from being overstated.
   • The Profit and Loss by class will show the debit transaction with the appropriate amount. The credit will show as unspecified. This is ok, since the original paycheck also shows unspecified.
   • When reviewing your true bottom line, use the Profit and Loss Detail report instead of the Profit and Loss by Class.