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QuickBooks Payroll Tip – Tracking Union Fringe Benefits

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hourly fringe benefit rateSetting up and tracking Union Fringe Benefits in QuickBooks can be a fairly straightforward task, after all Union Fringes are just a specified hourly dollar amount that the company pays to the Union on behalf of the employee.

Union fringes often consist of contributions to Vacation/Holiday, Health & Welfare, Pension, Training, and sometimes Travel & Subsistence, Savings, or Fund Administration.  Depending upon the Union that you are dealing with, some of the fringe benefits could be subject to payroll taxes, while others are not.

Most of the time fringes are calculated and paid based on the number of hours the employee works on the jobsite, occasionally, however, they are a based on a percentage of gross pay.

Regardless of how they are paid (based on an hourly amount or a percentage of gross) or if they are taxable or not; in QuickBooks, each of these specific types of hourly fringe benefits should be set up in the Payroll Item List as Company Contribution items.

Now that you know some basic information about Union Fringe Benefits and how you would track them in QuickBooks, let’s take it a step further and explore some of the more complex issues.

Not every employee will have the same fringe benefit package or the same fringe benefit rates.  This is where it becomes more complex.  So before you begin setting things up in QuickBooks; take the time to plan things out and ask yourself these questions:

  • Do my employees ALWAYS perform work under the same Work Classification/pay rate/fringe rate combination?
  • Is the Work Classification/pay rate/fringe rate combination the same for all the jobs that employees work on?
  • Is the Work Classification/pay rate/fringe rate combination the same for each of our employees?

Below are basic setup instructions if ALL of your employees fall under a single Work Classification/pay rate/fringe rate combination, nothing changes from job to job.  In QuickBooks:

  • You create company contribution items for each specific fringe benefit.
  • Check the “Track expenses by job” option in the item setup.
track expenses by job

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  • Create or choose the Union from the Vendor List.
  • Assign appropriate Payroll Liabilities account, personally I like to create a Sub-Item of Payroll Liabilities called Union Fringes, and then create Sub-Items under that for each fringe item – it just makes it easy to see what your liability for each fringe item is at any given time.
  • Assign the appropriate Expense or Cost of Goods Sold Account to record the company payments; personally I like to create a Sub-Account of Cost of Goods Sold called Union Fringes.
  • Choose the applicable Tax Tracking Type, based on the information you’ve received from the Union Hall.
  • If a specific fringe benefit is subject to payroll taxes, check which taxes are to be calculated on the Taxes window
select appropriate payroll taxes to calculate

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  • Select how the calculations are to be be performed.  If the fringe rate is paid on all straight time and overtime hours worked, choose “Calculate this item based on hours”.
calculate fringe benefits based on hours worked

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  • Enter the hourly rate for the benefit item and make sure that the Annual Limit option is NOT checked (by default QuickBooks always has this option selected.
hourly fringe benefit rate

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  • Edit employee records and add the fringe benefit company contribution items to the Payroll & Compensation Information tab in the Additions, Deductions and Company Contributions section.
  • When you create paychecks, QuickBooks automatically calculates the amounts for each employee.

Use the instructions above as a guideline for your QuickBooks setup.

16 Responses to QuickBooks Payroll Tip – Tracking Union Fringe Benefits

  • Donna
    I’m not really sure that I understand what you want.

    Union fringes are not something that literally goes to the employee so that they can spend it – it is money that you (the company) send to the Union Hall on their behalf – so having them show up as non-taxable company items is correct.

  • Is there a way to make the union fringe benefit a part of the employees pay so it shows on the pay stub as part of the pay they receive? Now it shows only as a non-taxable company item.

  • MaryBeth, I’d need to take a look at the setup in order to help. I think an hour would be plenty – you can purchase training/consulting time from this link – http://www.sunburstsoftwaresolutions.com/order-training.php

  • We are new to the contractor version of QuickBooks and we have two different unions we are working with. I was not involved on the set-up but am now being called upon to help clean up the situation. I cannot seem to get any of the amounts to work. I think it is because there were so many sub accounts set up. For instance we have a Pension account (50) and a Pension (50J) account for Journeymen. There has to be a way to simplify this. I am wondering if you can help.

  • Hi Patty, I did respond to your email, you may want to check your spam or junk mail folder. I’d be more than happy to schedule a call with you and help you with this.

  • Hi Nancy, I am in the process of entering the various union fringe benefits for each of our employees. It appears the ones I have entered to calculate on an hourly basis are working fine, but the ones that are figured on a % of gross wages are not figuring correctly. What can I do to get this rectified? Would it be possible to schedule a conference call? I have several more questions regarding the set up and payment of the benefits. Thank you!

  • Vanessa, I would need to look at your setup before making any recommendations. If you’d like you can schedule a 1 hour remote and I’d be happy to log into your computer and review the setup (which I’m almost certain is the problem based on your description). Training/troubleshooting sessions may be purchased here.

  • When a union sets a rate for straight time and a different rate for overtime, is there any way for Quickbooks to tell the difference. For example if annuity is one rate per hour for straight time and another rate per hour for overtime. So far i have been manually changing the hours in the employee contributions table when i create the paychecks. Quickbooks automatically groups straight time and overtime together as a whole. Any help would be appreciated!

  • Hi Kristina
    When employees are paid at different pay rates with different fringe rates during the same pay period – the setup is more complex and not something easily explained or demonstrated in a blog post. It can be done I assure you, I help people do that all the time. The best way to do this is to purchase at least a 1 hour training contract with me where I can discuss your specific needs and help you with the setup and use – training contracts can be purchased at http://www.sunburstsoftwaresolutions.com/order-training.php

  • I’m having some trouble setting up my fringe benefits. We pay them srtaight to the union hall. I guess the problem I’m having is I have some guys that are payed at diffrent rates in the same pay period. The fringe amount chagnes the higher the pay, How would I set that up?

  • You’re welcome Amy!

  • Thank you kindly.

  • Hi Amy
    Having been in some Union Audits over the years I’ve found that the Union prefers that this information is shown on employee paystubs. First, if you are audited by the Union and they ask for a copy of a specific paycheck – information for not only that specific check but also year to date info is readily available. Secondly, the Union (at least the ones I’ve dealt with) feels that the employee has a right to know how much money you have contributed to the Union Hall.

    Having said that, I believe that you can remove this information from the paystubs in QuickBooks 2011 (I don’t have 2011 installed on this machine), but try this:
    Log into QuickBooks in single-user mode as the Administrator.
    From the Edit menu –> choose Preferences
    Scroll down to Payroll & Employees –> click on the Company Preferences tab –> click on the Pay Stub & Voucher Printing button –> and uncheck the Non-taxable company items option.

    Your next set of paystubs should no longer display this information.
    Hope this helps.

  • I have entered company portion of union benefits into quickbooks 2011 pro. However, they are showing up on each of the employees check stubs….how can I remove this from the affected employees checks?
    Thank you for your kind attention.
    Amy

  • Hi Jennifer
    When you deal with employees working within multiple unions or even under more than one Work Classification, QuickBooks needs to be set up in a certain way in order to calculate the correct amount for each fringe benefit. Contact me at (888) 348-2877 to discuss this further.

    As for a third party solution – no 3rd party developer can make any changes to the way in which payroll in QuickBooks works.

  • I am a QB Certified Proadvisor and I have a client who uses Quickbooks Premier for Contractors. They have multiple employees working within multiple Unions. Quickbooks will not calculate hours for each Union on each paycheck. We don’t want to have to create more than one paycheck for each employee, but we don’t know how to do this within QB and hoping you have a third party software that could help us with this issue.

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About Your Host:

Nancy Smyth, Certified QuickBooks ProAdvisor

Nancy Smyth, Sunburst Software Solutions, Inc.
QuickBooks Construction & Payroll Expert


I've been using and supporting QuickBooks products since the early 1990's. I've worked with thousands of contractors, assisting them with QuickBooks setup, Certified Payroll Reporting requirements, AIA Billing and Weighted-Average Overtime.


QuickBooks is a powerful product, but learning how to use it in your construction business can be difficult. I hope you find resources available here to be helpful.

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