QuickBooks 2011 – New Balance Sheet by Class Report – Part 3

QuickBooks 2011  offers a new advanced Balance Sheet by Class Report that differs from other QuickBooks reports because it gives users the option of selecting “Classes” (fund, location, profit center, or other category) as their column grouping.  This will enable QuickBooks users to perform divisional accounting with QuickBooks, which was previously impossible or required significant duplication of effort.

While this report has been one that has been requested by many QuickBooks users and the accounting professionals who support them, it is not without limitations and drawbacks, making this a report that will be able to be used by some companies and in some instances but not all.

In our previous articles, QuickBooks 2011 – New Balance Sheet by Class Report – Part 1, we touched briefly on the fact that transactions will have to be entered in a very specific manner and there are many data entry transactions that are not supported by the Balance Sheet by Class Report; and in QuickBooks 2011 – New Balance Sheet by Class Report – Part 2, we discussed how accounting professionals and end users would need to change their procedures when creating journal entries so that they were balanced.

In this article, we’ll discuss one of the limitations that I was most disappointed in – and that is being unable to assign multiple classes in timesheets and then ultimately in paychecks.

Think of a company that has two “profit centers, divisions or crews” which they want to track using classes – a Service Crew that does smaller installations and a Contracts crew that does the bigger job; with a few employees bouncing back and forth between the crews.  If they need a Balance Sheet by Class Report, they might be out of luck IF they also want a Profit & Loss by Class Report; because the Balance Sheet by Class report doesn’t support the ability to use multiple classes on timesheets and ultimately paychecks and QuickBooks will display the transaction – bank accounts and payroll liabilities in an “unclassified” column on the report.

The resolution that the QuickBooks Help file provides may not be a satisfactory one for contractors, and other businesses, who want or need to track employees under multiple classes – in our example a Service Department and crew in addition to a Contracts Department and crew; and will require users to change their QuickBooks setup.

The first setting that has to be changed is found in the Payroll & Employees Preference (Edit menu -> Preferences -> Payroll & Employees -> Company Preferences).  Here you will need to look at the option to look at the Job Costing, Class and Item tracking for paycheck expenses option and verify or change it to Assign one class per -> Entire paycheck.  Previously such a company would have had the Assign one class per Earnings item option selected.

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Next, you will need to Edit each employee record (Employee Center -> Employees tab -> select Employee -> Edit -> Payroll & Compensation Info) and assign each employee to a SINGLE class (Service or Contracts, from our example).

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This is where some QuickBooks users will run into trouble; they may be able to assign some employees to a specific class/profit center/crew/or division.

My questions are these:

• What about the employees who “float” between the two in a single pay period?  Do they tell these employees that they are now only on an “on-call” status and that they will be called into work only on those days that they can work in a specific crew?
• Do the companies change their scheduling practices to accommodate for the required changes?
• Do the companies reduce their workforce and lay off the employees who “float” between jobs?
• Will the companies change their scheduling practices and leave it to the payroll clerks to change the Class of several employees each week?

Business owners such as these will have to make a choice between a Profit & Loss by Class Report and the Balance Sheet by Class Report.

Stay tuned for our next article which discusses unbalanced Payroll Liability payments.

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