Change payroll from Expense item to COGS

Welcome to the Intuit Community, jmanor.

When changing or moving an account to another, make sure it has the same type to avoid getting an error message. Based on the details provided, you’ll have to create another COGS account and enter a journal to associate the payroll expenses.

Here’s how:

1. Go to the Lists menu to select Chart of Accounts.
2. From there, scroll down to the bottom of the page and click the Account drop-down to choose New.
3. Mark the radio-button for Other Account Types and choose Cost of Goods Sold from the drop-down.
4. Click Continue to proceed.
5. Enter a term that will easily identify the item in the Account Name field.
6. Fill in the remaining field boxes.
7. Press Save and Close to keep the changes.

Since all businesses are unique, I suggest reaching out to your accountant for additional guidance. They can ensure the correct account is used to debit and credit the transaction.

For an overview of how to add and modify accounts, check out the Create, edit, or delete account in QuickBooks article.

Let me know if you need further assistance while working in QuickBooks. I’m more than happy to assist further. Have a good one.

I am trying to make my payroll account a cogs instead of an expense. However, when I try to change it, or merge them, the Account Type field is not lit up; therefore, I cannot change it. There are no hidden sub accounts. What do I do?

Greetings, @Long time user1. 

I appreciate you chiming in on this thread with your question. I can provide some information that may be helpful to your business. 

The reason that you may not be able to change this account type is because the account was automatically set up with QuickBooks. Here's more details with the accounts you can't change because they're automatically set up through the product: Learn about the chart of accounts in QuickBooks Desktop.

If this isn't the case, please let us know some additional information so we can determine the best solution for your business. I'm only a post away if you need me again. Wishing you and your business continued success!