Generating weekly certified payroll reports when you issue bi-weekly paychecks to your employees can be difficult unless your accounting software will accurately accrue the wages for each week – QuickBooks doesn’t have this ability and quite often this causes problems.
Payroll is one of the largest expenses that a company will have. Most companies, when they start up, will find out what the minimum requirements for paycheck frequencies are for the state that their business resides in – earlier this week we discussed paycheck/payroll frequencies by state – and they will follow those rules. This will work fine unless you are a contractor who makes the move to Public Works/Government Construction projects and become subject to prevailing wage laws. This is when problems can occur.
Under the Federal Davis-Bacon and related Acts; contractors and subcontractors performing work on Federal or Federally-aided construction-type contracts are required to submit weekly payrolls. The Copeland Act provides further/clearer requirements; indicating that contractors and subcontractors performing work on Federally financed or assisted construction contracts “furnish weekly a statement with respect to the wages paid to each employee during the preceding week”.
Obviously, contractors and subcontractors who issue their payroll on a weekly basis find the necessary information easier to obtain; therefore, making compliance of certified payroll reporting easier on the people who actually have to complete the reports.
What happens when your company is subject to the rules found in the Davis-Bacon and the Copeland Act and you issue your payroll on a bi-weekly basis?
I’m not here to tell you that you HAVE to start issuing your paychecks on a weekly basis – I’m only here to tell you what the requirements are and about what COULD happen – based on my experience; so that you can make an informed decision.
If you are lucky enough to have an accounting program that accurately accrues and distributes payroll taxes and wages based on when it is earned rather than when it is paid – you shouldn’t run into any issues when you create the certified payroll reports. BUT, if you use QuickBooks you need to be aware that it does not have this ability and your payroll is recognized only when you actually issue the paycheck and this is where the problem with your certified payroll reports COULD begin.
Each certified payroll report has a weekly calendar section {shown below} where by day and date you enter the number of hours that each employee worked on the prevailing wage job site and the total hours that he/she spend there during the entire week.
Right click on the image to enlarge it
When you issue payroll in QuickBooks on a bi-weekly basis – you will enter the time worked for each of the two separate workweeks in two individual timesheets, for example, let’s say that your pay period ends on a Saturday:
- Your first work week covers Sunday, December 21, 2003 through Saturday, December 27, 2003
- Your second work week covers Sunday December 28, 2003 through Saturday, January 3, 2004
- Your paychecks will be dated on January 7, 2004
Below are the two timesheet entries from QuickBooks:
- Workweek 1 has 24 hours on the Prevailing Wage Job and 16 hours on a non-prevailing wage job
Timesheet Work Week 1 - Right click to enlarge
- Workweek 2 has 24 hours on the Prevailing Wage Job and 16 hours on a non-prevailing wage job.
Timesheet Work Week 2 - Right click to enlarge
Next, we’ll look at the QuickBooks paycheck detail, you’ll see that the total number of hours are accurate for the full two weeks.
- A total of 48 hour at $28.50 per hour for $1,368.00 in wages for the prevailing wage job
- A total of 32 hours at $28.50 per hour for $916.00 in wages for the non-prevailing wage job
- Total gross for the 2 week period of $2,280.00
- Net wages for the week $1,528.33
Bi-weekly paycheck - right click to enlarge
When you create or run your certified payroll reports {whether is is with our Certified Payroll Solution software or using the built-in QuickBooks certified payroll report} you’ll need to generate two individual reports; one for each week. This is what the reports will look like:
- Week 1 – the hours are correct {24} and the rate of pay is correct {$28.50} BUT the gross amount earned This Job/All Jobs represents the FULL amounts from the bi-weekly paycheck {$1,368.00/$2,280.00} instead of $684.00 this job/ $1,140.00 All Jobs which was actually earned for this specific workweek.
Certified Payroll Report Week 1 - Right click to enlarge
- Week 2 – again, the hours are correct {24} and the rate of pay is correct {$28.50} BUT the gross amount earned This Job/All Jobs represents the FULL amounts from the bi-weekly paycheck {$1,368.00/$2,280.00} instead of $684.00 this job/ $1,140.00 All Jobs which was actually earned for this specific workweek.
Certified Payroll Report Week 2 - Right click to enlarge
Is this wrong? Well, sort of; the laws do indicate that payroll should be reported {therefore, issued} for the preceding week.
What can you do if you issue payroll on a bi-weekly basis?
Many of our own customers issue payroll on a bi-weekly basis, and on the Statement of Compliance {in the Remarks section} they add a note that indicates that they issue paychecks on a bi-weekly basis and while the certified payroll report accurately reflects the correct number of hours worked on the job for the specified week; gross amounts earned This Job/All Jobs, deductions {including taxes and other withholdings} and Net Pay reflect the full amounts from the single bi-weekly paycheck.
Will this statement keep you out of trouble?
Not necessarily, it all depends on the Contract Administrator and Awarding Agency.
The best thing to do, in my opinion, is to just bite the bullet and issue your payroll on a weekly basis; at least for the employees who work on the prevailing wage projects. This may mean some additional planing and scheduling on your part, but it’s easier than having your certified payroll reports rejected and having to manually calculate the gross, taxes, deductions and net pay and resubmit the reports!
Look for similar articles next week on how a semi-monthly or monthly payroll run will affect your certified payroll reports.
I hope that you’ve found this article to be informative and helpful in making informed decisions for your business; if so please take a moment to leave a comment or to share this with others on your favorite social networking platform using the buttons below.
If you use QuickBooks for your accounting and you create your Estimates in Excel instead of within QuickBooks you loose out on job costing capabilities and so much more!
I often see and hear comments such as this as I browse the web or talk with potential customers for our software:
Right now we are using QuickBooks Contractor. It is ok for our accounting software but we are looking for something that works as an overall system for our office – CRM, estimating, job costing, proposals, work tickets and most importantly easy for my guys to use. Right now we are using Excel for Estimates and invoices.
When I see and hear comments like this I get so confused – because QuickBooks does allow you to create Estimates, Proposals, and do Job Costing - so I thought I’d attempt to write a short article to address this.
Creating Estimates in Excel vs. QuickBooks – Pros and Cons:
Excel is REALLY easy to use – anyone can quickly whip up an Estimate, Proposal or a Work Order., you can create some great looking documents that you are proud to hand to your prospective customer. But that is about as far as you can go.
QuickBooks, on the other hand, if set up properly will allow you to create an Estimate, Proposal, Work Order, or an Invoice and perform job costing just by entering vendor bills, writing checks, entering credit card charges, and employee payroll. You then can access all kinds of Job Costing reports and an Actual vs. Estimate Report – which allows you to see the difference between what you thought you’d make on the job vs. what you actually made.
But….QuickBooks requires more work on the front end and then proper training for your employees.
I think I just heard everyone groan! There is no way that I can write a “short” article on the benefits of using QuickBooks to prepare these documents for your business, but I can provide you with some suggestions to get started.
- Is the QuickBooks Estimate function turned on? If not go to the Edit menu -> Preferences -> Jobs & Estimates -> Company Preferences tab -> set “Do You Create Estimates” AND “Do You Do Progress Invoicing” to Yes
- Modify/Customize the built in forms to meet the needs of your company using the Layout Designer, by downloading a pre-built template or by using the Create Form Design option. All of these options are available from the Lists menu -> Templates -> and then clicking the Template button at the bottom of the window.
- Create a FULL list of the services, cost codes and/or products your company uses for billing
- Have a meeting – get EVERYONE involved – take that master list of products and/or services/cost codes and come up with descriptions that EVERYONE can agree on {letting them know that they can “tweak” it more to their liking later}
- Go to the Items List and set up items that correspond to that master list of of the things your company does, creating Group Items or Inventory Assemblies if appropriate
- Create an Estimate, a Proposal, or a Work Order using the entries in your Item List – print it out and see what everyone things of it. If they are happy teach your Estimators how to use the Estimating function
- When entering Vendor bills, writing checks, or entering Credit Card Charges use the Items tab and assign the cost to the job
- Turn on time tracking, enter employee hours by Job, Service Item, and Payroll Item
- Create a Progress Invoice from an Estimate for the current amount that you are billing the customer
- Look at the Estimate vs Actual Report for a specific job and look at the report results
These suggestions are just the tip of the iceburg for taking QuickBooks from plain-Jane accounting to job-costing accounting. Use the search box on our site and enter specific keywords for additional tips.
If you can’t get your Estimators to leave Excel, there is a 3rd party application Transaction Pro Importer – that will import your Excel based Estimate into QuickBooks for you and you can implement some of the other suggestions in this article.
I hope you’ve found this article to be helpful, if so please take a moment to leave a comment or ask a question – or share it on your favorite social networking site if you think others would find it to be useful.
It’s our last official post for 2011 and we’d like to wish you all the happiest of holidays and say a warm “thank you” for your support and patronage this past year!
Seasons Greetings and Happy Holidays to all of you! I hope each and every one of you have a fantastic holiday season.
I’d like to thank everyone for your support of the QuickBooks for Contractors blog during the past year.
Our office will be closed from Friday, December 23 through Monday, December 26 and again from Friday, December 30 through Monday, January 2, 2012; while we share the holiday season with friends and family.
During this time were also going to do some well deserved maintenance and updates to our main website to prepare for 2012.
When we relaunch on Tuesday January 3, 2012, you’ll find that we’ve been very busy during this time. The Federal WH 347, certified payroll report is due to expire on December 31 and we will be providing information about the new reporting requirements so that you’ll be up to date. Additionally, after a very long delay, the Compliance Monitoring Unit, part of the California Department of Industrial Relations, will go into effect. So there will be information available about this as well.
In addition to these prevailing wage law changes you’ll find that we’ve been busy updating and creating new QuickBooks training materials geared for commercial and government construction contractors. These new materials will be in the form of e-books, pre-recorded videos and live webinars. All which will be reasonably priced.
Until then, have a safe and happy holiday season and be sure to check back next year to see what we’ve been up to!
QuickBooks 2012 will include batch timesheet creation as an enhancement to the current “Use Weekly Timesheet” feature, allowing you the option to select multiple employee or vendor names for time entry. From the information that I’ve seen, Intuit is marketing this feature to contractors as a timesaver, and it may be for some businesses, BUT THERE IS A CATCH……
Each group of employees or vendors that you select MUST work on the same Job, under the same Service Item AND the same Payroll Item MUST be used during timesheet creation – additionally, they must ALL work the same number of hours each day!
See the Batch Timesheet function in action on our YouTube video
In order to successfully use the Batch Timesheet feature in QuickBooks Pro/Premier 2012 and Enterprise 12.0:
1. You MUST enable timetracking
- Logged into QuickBooks as the QuickBooks Administrator in Single-User Mode
- From the Edit menu -> choose Preferences -> scroll to Time & Expenses {the last preference} -> click on the Company Preferences tab
- Under the Time Tracking – Do you track time option -> select Yes and set the FIRST day of your work week
Right click on the image to enlarge it
- Click OK to save your changes
2. The Use time data to create paychecks option MUST be enabled for each employee
- From the Employee menu -> choose Employee Center -> click on the Employees tab -> double-click on an employee name OR click the Edit Employee button
- From the Change tabs drop down menu -> choose Payroll & Compensation Info
- Make sure the Use time data to create paychecks option is checked.
Right click on the image to enlarge it
- Click the OK button to save the changes for this employee
- Repeat for each employee in your employee list
3. You MUST use the Weekly Timesheet function
- From the Employee menu -> choose Enter Time -> Use Weekly Timesheet OR from the Home Page -> click the Enter time icon -> Use Weekly Timesheet
- In the Name field, click the drop down list and select either Multiple Names (Payroll) OR Multiple Names (Non-Payroll)
Right click on the image to enlarge it
- In the pop-up window, select multiple names, by placing a checkmark next to the name, and click ok to finalize your selections
 Select multiple employees |
 Select vendors |
- Enter timesheet information, selecting the Job, Service Item and Payroll Item
- Click on the Save and Close button to enter the information
Be aware of a potential problem:
A potential problem that I see with this feature, is let’s say that there are 4 employees {or vendors} who worked on a Job Monday through Thursday; on Friday, only 3 of these employees {vendors} were there. When you enter multiple timesheets, I forsee most people selecting all 4 employees/vendors and automatically entering ALL of the the time for the entire week. Using the batch timesheet option, you would need to be very careful when entering hours in this type of situation – as it could result in an employee or vendor being paid for erroneous hours worked and no one catching it. On the flip side, for employees who worked overtime, additional entries would be required on their individual timesheets to record overtime hours – if not this would result in underpayment.
NOTE: If you really need this type of functionality, investigate our Crew/Overtime Entry Solution program, which allows you to enter “exceptions” {the 4th employee not working on Friday} prior to posting the time data to QuickBooks.
This QuickBooks payroll tip discusses underpaying employee wages and wage restitution, after paychecks have been created and cashed.
Paying your employees the correct rate of pay is one of the most critical portions of your business; and if those employees are subject to multiple pay rate or have frequent pay rate changes, ensuring that everyone is being paid the correct rate can be a tedious and potentially error prone process.
In today’s busy workplace, business owners and payroll administrators are faced with numerous challenges which sometimes result in employee wage underpayments. Often times a wage shortage isn’t discovered until after paychecks have been created and cashed; which then requires wage restitution to the employee.
Quite often this situation puts the business owner or payroll clerk in a quandary about how to best record employee wage restitution, especially if the employees are performing work on a prevailing wage job and they must document the wage adjustment on the certified payroll reports and resubmit the reports. Clearly documenting employee wage restitution is crucial, and can be accomplished in three fairly easy steps.
3 steps to documenting employee wage restitution/payment:
- In the QuickBooks Payroll Item List, create a new Hourly Wage Payroll item and name it Wage Restitution
- Edit the records of employees who were affected by the wage underpayment, add the adjustment payroll item to the Payroll & Compensation Info tab, with the appropriate rate of pay (the difference between what they should have been paid and what they were paid)
- Issue a separate paycheck, using the QuickBooks Unscheduled Payroll option, use the adjustment payroll item and enter the number of applicable hours*
*Important Note:
The best way to document a wage restitution on a certified payroll report is to display each employee twice on the report; once displaying the rate that he (she) was originally paid and a second time displaying the hourly rate of the wage adjustment. Clearly indicate that you are submitting a corrected report by writing, in large letters, CORRECTED and highlight it using a highlighter.
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Wage underpayments can often times be caused simply because in QuickBooks there is not an automated means of updating the pay rates of all employees at once. Wage Manager Solution, a QuickBooks integrated application, not only allows you to change the pay rates for all of your employees at once, it will also allow you to create new payroll wage items, assign it to multiple employees AND add a rate of pay….all at the same time.
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Watch a brief (10 minute) video about how Wage Manager Solution works and download a Free Trial.
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