Payroll Tip: Union Benefits Calculated Against Hours NOT Wages

27Feb 2012 by Nancy Smyth

 

Union fringe benefits can be calculated in a number of ways; some are based on a percentage of gross wages while others are a fixed dollar amount per hours worked.  Either way you look at it, it can become pretty complex.  Take this question from a blog reader for example.

I have union benefits that are calculated against the employee’s hours, not gross wages.  How do I do that in QuickBooks?

A.  In QuickBooks you want to set up your union benefits as Company Contribution Payroll Item types.

I find it to be faster if you go to the Lists menu -> Payroll Item List -> click the Payroll Item button at the lower left -. choose New -> and Custom Setup -> and Company Contribution.

QuickBooks payroll tipsWhen setting up the item you need to be very careful in following these directions:

  • Check the Track Expenses by Job option so these dollar amounts get into your job costing  reports.
  • On the Tax Tracking Type window – be very careful – DO NOT choose the *Fringe Benefits option; UNLESS these fringes have to appear on the employees W-2 at the end of the year.
  • On the Taxes window, usually none of the tax items are selected (checked).  Occasionally a union may have a fringe that is subject to payroll taxes – check with the Union Hall for this information.
  • On the Calculate Based on Quantity window, you can choose to have QuickBooks calculate this automatically based on ALL hours worked OR  select the option to Calculate this item based on quantity; where you manually enter the Quantity (number of hours worked) against the fringe benefit item when you create the paychecks.

*The QuickBooks Fringe Benefit tax tracking type usually refers to what the IRS considers to be fringes and should not be confused with Union Fringes.

While QuickBooks really wasn’t designed to provide you with the same robust features of a construction specific accounting software program (if it was it would cost the same $10,000.00 to $75,000.00); however, with some tricks, techniques and a little extra work on your part; you can accomplish the same functionality.

I hope you’ve found this Payroll tip for tracking fringe benefits to be helpful, if so please take a moment to leave a comment or to share it with others on your favorite social network using the buttons below.