I’m not entirely sure this is the correct method, but this is what we did to set up severance pay on QBD Pro.
Comments welcome from others who may see issues with this or a better solution.
- Payroll item type: Addition
- Name: Severance
- Account for tracking this expense: 24000 - Payroll Liabilities
- Balance Sheet: The liability for termination costs should be reported under current liabilities if it is expected to be settled within one year. If the costs are expected to be settled over a longer period, they should be classified as long-term liabilities.
- Record of Employment (ROE) Tracking: Unchecked 'Earnings' box, all other options are then greyed out.
- Tax tracking type: Box67/O - Non-eligible retiring allowances
- Taxes: Select Federal Taxes
- Calculate based on quantity: Neither (based on Net or Gross, or a flat amount per pay cheque)
- Gross vs net: Net
