How do I get wages to go to cost of goods sold instead of payroll expense in operating expenses?

Let's reclassify the Payroll Settings, usercrmjtm.

This way, you can change the wages to Cost of Goods Sold. I'll guide you how.

1. Go to the Gear icon and then choose Payroll Settings.
2. Select Accounting in the Preferences section
3. In the Wage Expense Accounts section, select I use different accounts for different groups of employees.
4. Choose the appropriate account (COGS) from the Wage Account drop-down menu for each employee.
5. Scroll down and click OK.
6. You'll be routed to the Account Preferences Summary page. 
7. From there, you're given the chance to update the existing transactions of your employees. 
8. Hit OK once the update is complete.

I'd also suggest consulting your accountant to guide you with the process to ensure everything is accurate. 

Moreover, I encourage running payroll reports in QuickBooks. This helps you keep track of your business and employees. 

In case you'll need assistance in dealing with payroll tasks, don't hesitate to get back on this thread. We're always here to help you.

I followed the steps and it did move the wages to cost of goods sold but now I have 2 cost of goods sold sections!

 Sales 
 Total Income 
 Cost of Goods Sold
 Cost of Goods Sold
 Supplies & materials 
 Total Cost of Goods Sold ******
 Direct Labor 
 Total Cost of Goods Sold $
 GROSS PROFIT $ 

I need to get rid of the Total Cost of Goods Sold that is under Supplies and Materials or move the Direct Labor up to the other part.  

Can you help?

Hi, @usercrmjtm.

I appreciate you for getting back to this forum. I'm here to help you with removing handling the accounts on your reports or income and expenses.

There's nothing wrong with your report, and Cost of Good Sold isn't posting twice. The titles services as header to track your transactions accordingly. Moreover, the Total Cost of Goods Sold section can't be removed from there.

If you wish to, you can export your report to Excel, then manually adjust the information from there. Here's how:

1. From the reports page, click on the Export icon.
2. Tap on Export to Excel.

For more tips about handling your reports, you can open these articles:

• Export your reports to Excel from QuickBooks Online
• Run reports in QuickBooks Online

I'm also adding this link to know more about the Cost of Good Sold: How to calculate and record COGS.

If you have any other follow-up questions about your accounts, please let me know by adding a comment below. I'm always here to help. Have a good one!

can this work in quickbooks enterprise desktop?

Hey there, @bverd. 

Thanks for following the thread and sharing your concerns. 

In QuickBooks Desktop, you can do this by editing the Payroll Item account to an account of your choosing. QuickBooks uses payroll items to track individual amounts on a paycheck and accumulate year-to-date (YTD) wage and tax amounts for each employee. I've included some steps to edit a payroll item account below. 

1. Go to the Lists menu, then select Payroll Item List.
2. Right-click on the appropriate item, then choose Edit Payroll Item.
3. Change the Account type. 

That should do it. For further details about this process, check out Edit a payroll item. 

Please let me know if you have any questions or concerns. Take care and have a wonderful week ahead! 

If I choose to have hourly wages applied to Direct Labor, is there also a way to have their hours divided up per customer?  (I have recently started using QB Time to do this, but there was a 6-week period prior to that where I was not able to use QB Time and now I need to somehow go back and allocate their hours to the customer they worked for, so it shows up under COGS.)