Tracking payroll expenses by class, department, or location
PrintOverview
You can track payroll expenses by department or location using classes.
Assumptions
You have an active payroll subscription and would like to class your employees' pay.
Expected Outcome
You will be able to produce class tracking reports including payroll.
Details
Why Use Class Tracking
In QuickBooks, assigning classes allows you to classify your transactions. You can use QuickBooks classes to classify your income and expenses by department, business office or location, separate properties you own, or any other meaningful breakdown of the business you do. For example, if you have a restaurant with three locations, you might create an Uptown, a Midtown, and a Downtown class for tracking income and expenses by location. A farmer might create a class for each enterprise, e.g., "Corn," "Hogs," and "Soybeans." At the end of an accounting period, you can create separate reports for each restaurant location. Likewise, the farmer can create separate reports for each farm enterprise. The classes you create appear on your Class list. The "Use class tracking" preference in the Accounting Preferences window adds a Class field to windows where you enter invoices, checks, bills, credit card charges, or other transactions.
Consider the following when setting up class tracking:
- Set up classes on the basis of the type of reporting that you want to do, and consider how you want to see your business segmented on reports.
- Set up a class such as "other" that you can use to deliberately classify transactions that do not fit into any specific class that you have defined.
- Do not use classes for two different purposes. E.g., do not create classes for tracking office locations in addition to tracking partners.
- Identify both income and expenses for each class you set up.
- Consistently enter the class information on your forms and registers to be sure that this information is valid and useful.
Set preferences for tracking payroll using classes.
- From the QuickBooks Edit menu, choose Preferences.
- Click the Accounting icon, and then click the Company Preferences tab.
- Select Use class tracking and click OK.
- If prompted, click Yes to save changes.
- In the Preferences window, click the Payroll & Employees icon.
- Be sure that Full payroll is selected in the QuickBooks Payroll Features section.
- Select Job Costing, Class and Item tracking for paycheck expenses.
- If you want to assign one class to an entire paycheck, select Entire paycheck.
- If you want to assign one class to each item on the paycheck, select Earnings item.
- Click OK.
If you selected the Earnings Item payroll preference (so you can assign one class for each earnings item on a paycheck), the Preview Paycheck window will include a Class column. You can now assign a different class to each earnings item. If you selected the Entire paycheck payroll preference, your payroll expenses will be prorated by class on reports.
To identify how payroll expenses are distributed to each class, use the formula:
Once you have chosen to report on payroll taxes by job and class, reports of expenses by job and class break down company-paid payroll expenses not only for salaries and hourly wages, but also for company-paid payroll taxes.
You can also assign classes to Addition and Company Contribution payroll items (if you have QuickBooks 2010 and above you can also assign a class to deduction items.)
To assign classes to payroll additions, commissions, company contributions (and deductions if QuickBooks 2010 and above):
- From the Lists menu, choose Payroll Item List.
- Double-click an Addition or Company Contribution item to open the Edit Payroll Item window.
- In the Name used in paychecks and payroll report window, select Track Expenses By Job.
- Click Next until you can click Finish.
Generate a Payroll Summary report broken down by class to show the company paid liabilities and the gross pay.
- From the QuickBooks Reports menu, choose Employees & Payroll Reports, and then choose Payroll Summary.
- Click Modify Report on the report button bar.
- From the Column drop-down list, select Class.
- Make any other changes to the report, and then click OK.
