To process Payroll through Zero- Dollar checks in order to record payroll costs is considered to be the easiest way. Contractors and businesses may get great benefit from this solution as it works really nice if they want to track and handle labor costs at the job or department level.
Follow the steps for making this all work:
- In order to begin, you are required to turn off the payroll option in QuickBooks preferences so that no warnings would remain there in regard to download tax tables and setting up your payroll.
- With the help of journal entry, you need to enter the totals of your payroll just as you do in the payroll service. Further, this entry needs to be credit in the bank account for net pay and the gross wages, payroll taxes should be debited.
- Calculate the average cost of one person. And for calculating this amount, you will have to go through your total payroll expenses, consists of Payroll taxes and worker’s compensation. And the expenses that are not required needed to be subtracted. And then the total number of employees worked on all jobs during the period should be divided.
- Bank account by the name of payroll Service Clearing should be created. This account will help to record the Zero-dollar checks for the sake of payroll job costing. This is basically a clearing account.
- There is one more clearing which is needed to create that is payroll job costs. This will be helpful in showing balances on the job cost like P&L by the job. You may use another asset in place of payroll job cost, in case, you are having long-term contracts.
- You need to modify each existing “service” product in your product list. After that Enter “Payroll Costs for Jobs and Classes”
- in the Description on Purchase Transactions field, enter “18.00” in the Cost field, and finally enter “Payroll Job Costs” at the Expense
- Account field.
- Click OK to save changes.
- Proceed to Create the Other Name record (not an Employee record) for each and every employee.
- You should properly enter the timesheet information on a daily basis for the sake of each employee using another record created by you. Add the Service item and the name of the job on each timesheet.
- Proceed to open the write checks window in order to record job cost for each paycheck. After that select payroll service right from the menu of Account drop down.
- You are required to enter the employee’s name (Other Name) on the Pay to the Order of
- field of the Check, and then click the TAB.
- You will be asked by the QuickBooks itself that the information, you have entered in the timesheet, you want to use while creating a check and after that tap yes.
- After that Enter 01/01/2007 in the Start Date field and 01/31/2007 in the End Date field. Then click OK. You need to select the period for which you want to job cost payroll expenses. If you desire to use this method monthly, proceed to enter the beginning and ending date of the month.
- The timesheet information will be imported into the items tab of the check by the QuickBooks.
- After that, you are required to click the Expense tab and then proceed to enter payroll costs in the Account field and also click the amount of the check as a negative number. Always remember that this check does not increase the balance in the payroll as you were already using a General Journal Entry in order to update General Ledger for payroll expenses.
- In order to record the Zero-dollar check, you need to click Save.
- In order to confirm that payroll expenses are now displayed for specific jobs, revisit the profit and loss. Do not forget to mention the date of the Zero check in your report.
Hopefully, the above-written article makes you understand that what the procedure of QuickBooks job costing is when using a payroll service. Read it carefully in order to get the full benefit of QuickBooks payroll services.