Job-Costing Payroll Workaround with Payroll Service

The best way to do labor job-costing is to run the payroll through QuickBooks, using time sheet entry.  Intuit has something called “assisted payroll”, where you run the payroll in the software and then and submit it electronically to them and they file your forms and pay your taxes.  

 If you are stuck with the payroll service, there is a work-around you can do – it’s not exact, but you can come close.  Here it is:

 Set up each employee as a vendor

  1. Enter their time sheet into QuickBooks under the vendor name, be sure to assign the job and labor item
  2. On a regular basis (weekly?) Create a “check” to the employee/vendor – when you enter their name on a check, it will ask you if you want to pay using the time entered – say yes
  3. The time will populate in detail in the split area (on the item tab) of the check – enter a rate for the employee that is approximate to the base hourly wage, plus payroll taxes (usually about 12%) plus work comp to populate the amounts for each line item
  4. At the bottom of the detail, enter the labor item on one line and enter a negative amount for the ENTIRE AMOUNT OF THE CHECK
  5. The net check amount will always be zero!  You are basically creating job costs – then zeroing them out to no job.  The actual paycheck created the expenses, so this check is just a wash.

 This can be tricky and if you don’t zero out the check it’s going to be a mess.  It’s also a lot more work than processing the payroll through QuickBooks, but it does work to get payroll costs assigned to jobs.

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