A QuickBooks for contractors tip about receiving and applying joint checks from a general contractor to pay a lower tier subcontractor or material supplier for work completed or materials on a construction project.
Quite frequently, in the construction industry, a contractor will receive a joint check from a General Contractor to pay their lower tier subcontractors or material suppliers for work completed and/or materials delivered to the construction project’s job site.
Unlike many high-end construction accounting packages, QuickBooks doesn’t have a way to handle this automatically — or easily.
This QuickBooks for contractors tip provides what we consider to be a best practice when a situation like this arises.
Problem:
Your company, Sam Subcontracting, received a $10,000.00 joint check from Joe’s General Contracting; which is made out to both your company AND O’Fallen Gravel {your Vendor/Material Supplier} who delivered sand, gravel, and crushed rock to a jobsite. The $10,000.00 was included in your most recent invoice totaling $45,000.00 that you sent to Joe’s General Contracting AND you have a $10,000.00 invoice from O’Fallen Gravel in Accounts Payable. Amy, your bookkeeper, isn’t sure how to correctly receive this payment against your own Accounts Receivable AND correctly apply this payment to your Accounts Payable.
Solution:
When Amy is ready to receive the payment against the invoice issued to Joe’s General Contracting AND record the payment to O’Fallen Gravel, she should do the following:
- Verify that she has a special “Clearing” Account in her QuickBooks Chart of Accounts that is a “Bank” type – if one does not exist she should create it by going to the Lists menu -> Chart of Accounts -> Account -> New -> Type = Bank -> Continue -> Account Name = Clearing -> Save & Close.
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- Click the Receive Payment icon on the QuickBooks Home Page – OR – from the Customers menu -> choose Receive Payments. Received From = Joe’s General Contracting -> Amount = $10,000.00 -> Date = Current Date -> Pmt. Method = Check -> Check # = Check Number -> Memo = Joint Check issued to O’Fallen Gravel -> Deposit to = CLEARING ACCOUNT. Click Save & Close.
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- The balance in the Clearing Account should now be $10,000.00.
- Click the Pay Bills icon on the QuickBooks Home Page – OR – from the Vendors menu -> choose Pay Bills. Choose the O’Fallen Gravel bill -> Method = Check -> Select Assign check number -> Account = CLEARING ACCOUNT.
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- Click Pay Selected Bills.
- In the Assign Check Numbers window – enter the number of the check that you received from Joe’s General Contracting.
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- Click OK
- The balance in the Clearing Account should be 0.
Make sure that you also have the proper Lien Waive and Release forms.
We hope you found this QuickBooks tip to be useful — if so please take a moment to leave a comment, share it on your favorite social media site or click the +1 button below.
A QuickBooks payroll tip for replacing a lost employee paycheck.
I’m sure that you’ve all run into this situation at one time or another: an employee sheepishly comes to you and tells you that he’s lost his paycheck, it was run through the washer, blew out the care window on his way to the bank, he can’t find it, etc. – and he NEEDS his money!
This situation can create quite a quandary for some business owners and their payroll clerks about how to replace this lost check. The immediate need is to reissue the paycheck.
Follow these easy steps to replace a lost employee paycheck:
- Go the Employee Center, click on the Employees tab and click on the Employees name to display his payroll history
- Write down the Number of the check that you will be replacing.
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- Double-click on the check entry to open the paycheck form.
- Change the original check number to be the number of the current check that you will be printing.
- In the memo field type in “Replaces original check # XXXXX”.
- Click the Print button at the top of the paycheck form. A window will display prompting you to record your changes; click the Yes button. Another window will appear and you may need to type in the current check number again. Follow any remaining prompts, and the paycheck will be recorded with the new check number.
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You can now sign the replacement paycheck and give it to your employee so he can cash it.
The next step is to record the original check number as a “voided” check to maintain a good paper trail and it’s important to resist the urge to skip this step!
To record the original check number as a voided check:
- From the Home Page, click on the Write Checks icon
- In the check number field enter the original paycheck number
- Make sure that the date is the date of the original paycheck
- In the Pay to the Order of field, using the drop down menu select the Employee’s Name. You may immediately receive a warning message stating “If you want to create a paycheck for this employee, please use the built-in payroll features” – click the Ok button.
- From the Edit menu -> choose Void Check. This places the word VOID: in the memo field.
- Click into the Memo field and after the word VOID: type in “Replaced with Check # XXXX”
- Click into the Account field at the bottom of the check and choose your Payroll Wages account.
- Click Save & Close.
Now when you go to the Employee Center and click on the Employee’s name, you’ll see a visible record of the events that have just taken place, just like the screenshot below:
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NOTE: If the information that you see in the Employee Center doesn’t look like our screen shots, you can change your settings to make this information display by following these instructions.
If your right panel doesn’t display employee information at the top and paycheck transactions at the bottom – at the upper right of the Employee list window you’ll see an <– button, click on it to change the display to show this information.
If the transaction window doesn’t display the check number and memo field columns, right click anywhere in the transaction window and choose Customize Columns, a window will display. Here you can click on Chk No to highlight it and then click the Add button (this moves the Chk No field from the Available Columns window to the Chosen Columns window). Select Memo to highlight it and then click the Add button. Move the newly added items in the Chosen Columns window around arrange them as you would like to see the information displayed. Click Ok when you have arranged the information to your liking.
As an additional precaution, you may want to contact your bank and issue a Stop Payment on the original check number. While you may be charged a fee by your bank, it will ensure that the original check is never cashed.
We hope you’ve found this QuickBooks Payroll Tip to be helpful. If so, please feel free to leave a comment below.
A QuickBooks payroll tip about voiding paychecks – you should be very careful when choosing to void a paycheck because payroll checks have associated tax and other liability calculations and payments that need to be taken into consideration and it will result in changing payroll year-to-date amounts.
A common, and acceptable, reason to void a paycheck would be if the employee or someone else in your company notices an error on the check before it is cashed – in this situation voiding the check is acceptable because it will not have a negative impact on payroll liability calculations – because those liabilities have not yet been paid.
Be VERY careful about voiding a check if the employee has never picked it up – or it cannot be delivered to the employee because as an employer you have certain responsibilities regarding unclaimed paychecks.
You’ll find that there are several ways in which to make corrections to a paycheck that has already been printed, but not given to the employee OR given to the employee but not yet cashed; this is the method that I recommend:
Open the QuickBooks check register, find the check that you wish to void, click on the line entry to highlight/select it, right-click on the entry and choose the Void Paycheck option.
You can then make any timesheet entry changes, if necessary, and reissue the check by going to the Payroll Center and selecting the Unscheduled Payroll option.
Another method would be to simply open the paycheck in QuickBooks, make the necessary changes and reprint the check, giving it a new check number. This method leaves you with having to also record the already printed check as a voided check
- by opening the Write Checks window
- entering the check number of the check to be voided
- setting the correct date
- selecting the employee name and then dealing with a warning message about “If you want to create a paycheck for this employee, please use the built-in payroll features”
- clicking the Edit menu and choosing the Void Check option
You will also need to go back and make changes to the Employee Weekly Timesheet, if applicable. This method creates a lot of extra work and some of the necessary steps may be overlooked – which is why I’m not fond of it.
Tracking employee advances or loans in QuickBooks on future paychecks is a must for those companies that has a policy that allows giving employees advances/loans for personal reasons.
There are three ways in which to record an employee advance or loan:
- Including it with the employees regular paycheck
- Writing a regular check
- Giving the employee cash from the company Petty Cash account
Step 1 – Create an Other Current Asset Account to track employee advances/loans
The first thing that you need to do – or have in place – is an Other Current Asset type account in your QuickBooks Chart of Accounts to track the money that is given to the employee.
If you need to create the account:
- From the Lists menu -> choose Chart of Accounts
- Click the Account button at the lower left -> choose New
- Click the radio button next to Other Account Types -> and from the drop down menu choose Other Current Asset -> click the Continue button
- Complete the details for the account -> Account Name = Employee Advances/Loans -> Account Description = To record employee advances or loans and repayments on future earnings.
Important Note: If your company frequently provides employees with advances on future earnings, create sub-accounts for each employee advance or loan; including the employee name and loan date in the account name.
Issuing an Advance or Loan to the employee as part of his or her regular paycheck.
If you want to provide the advance or loan money with the employee’s regular paycheck you will need to have in place or create an “Addition” type payroll item to record the money given to the employee.
If you currently don’t have an item in place, you will need to create one.
- From the Lists menu -> choose Payroll Item List
- Click the Payroll Item button at the lower left -> and choose New
- Choose Custom Setup -> and click Next
- Click the radio button next to Addition -> click the Next button
- In the Name field, enter the date, the employee’s name, and indicate if it is a loan or an advance. For example: 5/9/11 Mark Mason Advance. Click the Next button.
- On the Expense Account window, using the drop-down menu, choose the appropriate “Advance” account -> click the Next button
- On the Tax Tracking Type window, select None and click the Next button.
- On the Taxes window, there should be no check marks -> click the Next button
- On the Calculate based on quantity window, select Neither -> click the Next button
- On the Gross vs. Net window, select net pay -> click the Next button
- On the Default rate and Limit window, you can either leave both fields blank OR you can enter the full amount of the advance or loan in the first box -> click finish.
When you create the employee’s regular paycheck, from the Other Payroll Item box, select the “Addition” payroll item and enter the dollar amount.
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Providing an advance or loan by writing a check.
Create an entry for the employee in the Vendor Center or the Other Names List, use this newly created name when completing the QuickBooks Write Checks window and from the Expenses tab, select the appropriate Employee Advance/Loan account from your Chart of Accounts.
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Giving the employee cash from the company Petty Cash Account.
You’ll want to make sure that the employee’s name exists in either your Vendor Center or in the Other Names List.
Open your Petty Cash Account register, select the Vendor or Other Name entry, enter the dollar amount given to the employee and select the appropriate “Advance/Loan” listing in your Chart of Accounts.
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Repayment of employee advances can then be paid back to the company through payroll deductions, which is the subject of tomorrow’s Wednesday’s blog post.
A new Certified Payroll Solution support article has been added to our main website – Matching Your QuickBooks Paycheck Totals With Your Certified Payroll Report Totals
A guide for verifying and troubleshooting the accuracy of your final certified payroll reports before you submit them is an important step in your overall success in using Certified Payroll Solution and getting paid on time.
This mini-manual focuses on the Federal WH-347 form – which everyone has access to, 99% of the time, if the WH-347 form is accurate, any other state specific form that you are required to complete will be also. It will teach you how to:
Match your QuickBooks paycheck totals with your Certified Payroll Report totals
Correct the 6 most common problems, based on over 10 years worth of support calls
- When employee Work Classifications are not correct
- When Straight Time and Overtime hours do not show correctly, are displayed under 2 different Work Classifications, or are missing
- When Column 6 does not display the correct base rate of pay and/or cash fringe rate
- When Gross Amount Earned ALL JOBS (the lower number in Column 7) does not match the total Earnings PLUS any Additions included on the paycheck
- When Total Deductions do not match the Taxes PLUS any Deductions withheld on the employees paycheck AND when Net Wages Paid for Week (Column 9) does not match the amount of the paycheck
- When the “Other Deductions Key Coding” does not accurately reflect the deductions taken from the employee paychecks
Verify where every piece of information on both the Certified Payroll Report AND the Statement of Compliance comes from so there are no “empty” spaces or missing information
This 37-page document is divided into 3 sections and procedures for matching your paycheck totals with your final certified payroll report totals. The procedures are different depending on how you pay the fringe benefit portion of the prevailing wage:
- Full fringe amount is paid to the employee as part of gross hourly wage
- Full fringe amount is paid to a Union or into a bona-fide plan
- A portion of the full fringe is paid to a bona-fide plan and the balance is paid to the employee in cash
If you use Certified Payroll Solution, download your copy of Matching Your QuickBooks Paycheck Totals With Your Certified Payroll Report Totals today.
