This QuickBooks payroll tip discusses how to create various reports for hours worked before creating paychecks – to ensure that your employees are being paid correctly and that your job costing will be accurate.
An important part of running any business involves keeping track of how many hours your employees work on a specific job and/or task and then accurately paying your employees for those hours. This is especially true for accurate job costing – no matter what type of business you run.
The amount of time spent on record keeping for payroll can be overwhelming for anyone and usually involves multiple people.
This is especially true if you are still using mostly manual methods; for example back when I used to do the payroll for a contractor who had 125 employees working on 5 different jobs – we had a job time sheet for each job every week. The foreman on each job would turn in a handwritten report each week that listed who worked on the job, what their classification was, how many hours they worked each day, etc. Sometimes the employees worked under more than one work classification or task (each involving a different rate of pay) and other times a small group of employees would end up working on all 5 different jobs we had going on during a single workweek – and I would have to take those 5 job time sheets and enter them into QuickBooks in order to run payroll. Not a fun job and highly error prone – especially if I had an issue reading someone’s handwriting!
It’s important to run reports to verify the accuracy of the data entered into the QuickBooks Weekly Timesheet before cutting payroll!
Reports for hours worked to run in QuickBooks before creating paychecks
QuickBooks offers several reports that you can generate and use to verify that employee hours have been entered correctly.
- From the Reports menu
- Choose Jobs, Time & Mileage
- Here you’ll find several “Time by” reports, I like the Time by Job Detail Report
- Set the dates to be the workweek and employee hours by job will be displayed
This by itself is a very useful report, but it only displays the hours and the service item (cost code) that the hours were posted against. My payroll item list was always pretty specific (I named my payroll items by the work classification that the employees worked under) and I wanted to include that information in the Time by Job Detail Report – if your payroll item list is pretty specific; you too can include that information.
- Once the standard Time by Job Detail Report is displayed
- Click the Modify button at the upper right
- In the Display box, place a checkmark next to Payroll Item and click Ok
Once you have this overall report, the possibilities are endless. For example, you can go back into the Modify option and Filter it for a specific job, print it out and give it back to the foreman along with his original timesheet for the job for his approval – get him to sign off on the report.
If you memorize these reports it will make it so much easier for you each week.
We hope you found this tip to be helpful, if so please feel free to share it, or leave a comment.
This QuickBooks payroll tip discusses how to correct payroll hours incorrectly charged to a job after paychecks have been created and cashed.
Accurately job costing payroll hours and wages is critical for many business types, not just contractors. The information that is entered in QuickBooks Weekly Timesheets and paychecks is only as good as the information that is received from those who are responsible for providing the payroll clerk with the original employee hours spend on various jobs. However, we are all human and, therefore, make mistakes, some mistakes can be corrected more easily than others.
A common mistake that can occur is the reporting of employee payroll hours on one job – - when those hours really should have been reported on another job; for example it was originally reported that employee John Doe worked 20 hours on Job A – in reality those 20 hours were spent on Job B. Quite often this error is reported to the payroll clerk after paychecks have already been processed and the checks have been cashed.
Quite often this situation puts the payroll clerk in a quandary about how to correct payroll hours incorrectly charged to a job.
When the error just involves changing a job {moving the hours from Job A to Job B} and does not involve also having to change a rate of pay; the easiest way to correct payroll hours incorrectly charged to a job is to edit both the timesheet and paycheck detail for the employee and change the job there.
When you edit both the timesheet and the paycheck detail, change the job, and then save your changes, QuickBooks will throw out some warning messages – don’t worry, for once it is ok to ignore these messages. Usually it’s not a good idea to ignore warning messages.
Another situation in which this type of correction can occur is when payroll is being processed, using time data entered in the Weekly Timesheet, and the payroll clerk is verifying the hours entered in QuickBooks against the timecards from the field, she discovers that the timesheet referenced Job A and it should have been Job B. The initial reaction is to just go ahead and make the change in the paycheck detail and call it good. However, what many people do not realize is that when you make a change in the paycheck, while processing payroll, the original timesheet entry is not updated to reflect this updated information – you must also go back and correct the job assignment in the timesheet.
Recap: If it’s just a change in job and not a change in hourly rate/wages; edit both the timesheet and the paycheck detail and make the change. That is the easiest thing to do to correct payroll hours incorrectly charged to a job when it doesn’t have an impact on wages.
A QuickBooks tip for creating a job cost report that displays hours worked and payroll/labor burden costs.
Creating a job cost report displaying the hours worked by employee, on a specific job or on all jobs, for a specific week or at the end of a job which includes payroll/labor burden costs can provide a contractor with vital job costing information so you can see if you correctly bid the number of man hours and payroll costs required on a job.
NOTE: It is highly recommended that you start with a single pay period AND a single paycheck to ensure that your report is correct. Once the report is correct, memorize it and you can then either finish your payroll or change the dates to better suite your needs.
- From the Reports menu -> choose Custom Transaction Detail Report (the Modify Report:Custom Transaction Detail Report window may or may not automatically appear; if it does not, click the Modify Report button)
- On the Display tab, navigate to the Columns section and using the scroll bar on the right of the window select (click) only the following options – Date, Num, Name, Source Name, Item, Payroll Item, Qty, Sales Price, Amount and Balance. All other items in this list that were preselected should be unchecked.
- Click on the Filters tab
- in the Choose Filter block, click on Transaction Type -> from the Transaction Type drop down menu select Paychecks
- still in the Choose Filter block, click on Account -> from the Account drop down menu -> select Multiple Accounts -> and click on each of your Payroll Expense or Payroll Cost of Goods Sold Payroll Costs accounts.
- Click the OK button.
Print your Report – but do not close it yet:
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Compare the report to the employees paycheck – making sure that ALL of the amounts from the Company Summary section of the Paycheck Detail are included in your report.
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If all of your costs are included, return to the report, click the Modify Report button -> click on the Header/Footer tab -> change the Report Title to Job Cost Report with Hours & Payroll/Labor Burden Costs -> click OK. Next click the Memorize button and save it.
You can now pull up the memorized report at any time and make further modifications for a specific date range or even a specific job.
To run the memorized report for a specific job:
- From the Reports menu -> choose Memorized Reports -> select your report
- Click the Modify Report button -> click the Filters tab -> from the Filters box -> click on Name -> from the Name dropdown menu select just the specific job
- From the Dates drop down menu -> select All
- Click the Refresh button
This will produce a report just for this specific job and include all payroll/labor burden costs to date. This is a valuable report to run at the end of a job.
We hope you found this QuickBooks tip for creating a job cost report which included hours and payroll/labor burden costs helpful. If so, please take a moment of your time to leave a comment.
Author’s Note: The idea for this post originally came from Ruth Perryman – however, it has been modified to include additional instructions and details.
A QuickBooks tip for creating a job cost report that displays hours worked.
Creating a job cost report displaying the hours worked by employee, on a specific job or on all jobs, for a specific week or at the end of a job can provide a contractor with vital job costing information so you can see if you correctly bid the number of man hours required on a job.
Luckily, QuickBooks will provide you with this information through the Time by Job Summary or Time by Job Detail Reports, this article will teach you how to modify the reports for your business needs, however, in order for these reports to be useful you must enter employee hours using the QuickBooks Enter Time function.
The Time by Job Summary Report
- From the Reports menu
- Choose Jobs, Time & Mileage
- Time by Job Summary
- From the Dates menu, scroll up to select ALL
This initial report will provide you with summarized information about the total number of hours worked for each QuickBooks Item/Cost Code/or section totaled by job.
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While this can provide you with useful information, perhaps you would like to filter the report to include the total time spent on a single, completed job, by cost code.
- Click the Modify Report button at the upper right – above the Dates option
- From the Modify Report: Time by Job Summary window, click on the Filters tab
- From the Choose Filter box, click on Customer:Job
- From the Customer:Job drop down menu (where it currently says All customers/jobs), select Multiple customers/jobs
- From the Select Customer:Job window, scroll through the list of Customers and Jobs until you see the job that you want and click on it to select it.
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- Click the OK button, twice
- You now have a time summary report for just this single job.
The Time by Job Detail Report
- From the Reports menu
- Choose Jobs, Time & Mileage
- Time by Job Detail Report
This initial report will provide you with detailed information about the total number of hours worked by each employee under each QuickBooks Item/Cost Code/or section; subtotaled by each cost code and totaled by job.
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While this can provide you with useful information, perhaps you would like to filter the report to include the total time spent on a single, completed job, by employee and cost code.
- Click the Modify Report button at the upper right – above the Dates option
- On the Dates tab from the Dates drop down menu, scroll up to select All, you can also add or remove columns to display in the report for Payroll Item, Class, Notes and WC Code.
- Click on the Filters tab
- From the Choose Filter box, click on Customer:Job
- From the Customer:Job drop down menu (where it currently says All customers/jobs), select Multiple customers/jobs
- From the Select Customer:Job window, scroll through the list of Customers and Jobs until you see the job that you want and click on it to select it.
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- Click the OK button, twice
- You now have a time by job detail report for just this single job.
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These reports will help you to see how accurately you bid your man hours on a job, however, they will NOT include payroll dollars. You could export the modified time by job detail report to Excel, add a column for Rate (the rate being the hourly wage PLUS the hourly labor burden), add some simple formulas to the spreadsheet and also get the total cost.
NOTE: Always check the Time by Job Detail Report for a No Item Assigned section, hours that appear in this section have been assigned to a job, but not assigned to a QuickBooks item or cost code and this will make your job costing reports inaccurate.
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You can correct the job costing reports by pulling the original hard copy timesheets and double click on each entry (which will take you to the time entry field) and you can assign the correct cost code. You will also need to go to the paycheck detail and add the cost code there as well.
We highly recommend that you run the Time by Job Detail Report each week after entering employee hours, but BEFORE you issue payroll to make sure that everything has been correctly costed to your jobs.
We hope you’ve found this post helpful – if so please leave a comment.
A QuickBooks payroll tip for calculating Workers Compensation when it is based on hours worked.
Workers Compensation Insurance is usually calculated as a rate which is applied to gross wages; and that’s how the built-in QuickBooks Worker’s Compensation feature calculates it. Last week, on the Intuit Community Forum, someone asked how you would set QuickBooks up to track Workers Compensation when it was a rate based on hours worked.
I gave a brief overview on the forum, but thought that it deserved a more detailed “how to” here on our blog.
Before you begin, you’ll need at least three accounts in your Chart of Accounts to track your Liability and Expenses:
- one to track the accruing Worker’s Compensation Liability {an Other Current Liability Account}
- one to track job or field related Worker’s Comp Expenses {a Cost of Good Sold or Direct Labor Costs}
- one to track administrative or overhead Worker’s Comp Expenses {an Expense account}
Next you’ll want to get your Worker’s Compensation rate sheet and using the rate sheet we’ll being adding QuickBooks Company Contribution Payroll items for each different classification code/experience rate.
- From the Lists menu -> choose Payroll Item List
- click the Payroll Item button at the bottom left
- choose New
- select the Custom Setup option
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- click the Next button
- select the Company Contribution option
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- click the Next button
- type in the classification code/experience rate name
- check the option to Track expenses by job {this selection is crucial for job costing}
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- click the Next button
- select your Worker’s Compensation Carrier
- select the Other Current Liability Account for tracking your accrued liability
- select your Cost of Goods Sold or Expense account
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- click the Next button
- in the Tax tracking type window, select None, click the Next button
- on the Taxes window, none of the tax items should be checked, click the Next button
- on the Calculate based on Quantity window you can choose two different methods of calculation:
- Calculate this item based on quantity – use this option if your employees perform work under more than one classification/experience rate during the week. You will have full control of the number of hours that count toward each experience rate.
- Calculate this item based on hours – use this option if each of your employees perform work under only a single classification or experience rate during the week. QuickBooks will automatically calculate the rate based on the total number of Straight and Overtime hours worked.
Using the Calculate this item based on quantity option:
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- click the Next button
- on the Default rate and limit window – in the first box, enter the experience rate for this classification, leave the 2nd field empty, and make sure that you UNCHECK the “This is an annual limit” option
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- click the Finish button.
Add this company contribution payroll item to each applicable employee’s record.
When using this method, when you are creating the employee’s paycheck you will manually enter the number of hours that the employee worked under each experience rate in the Quantity column, once you enter the Quantity {number of hours} for each experience rate QuickBooks will perform the calculation and display the applicable amount in the Company Contribution section of the paycheck.
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Using the Calculate this item based on hours option:
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- click the Next button
- on the Default rate and limit window – in the first box, enter the experience rate for this classification, leave the 2nd field empty, and make sure that you UNCHECK the “This is an annual limit” option
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- click the Finish button.
Add this company contribution payroll item to each applicable employee’s record.
When using this method, when you are creating the employee’s paycheck QuickBooks will automatically make the calculations for you by displaying the total number of hours the employee worked against the experience rate in the Quantity column and display the applicable amount in the Company Contribution section of the paycheck.
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When you pay your Worker’s comp do so through the Pay Liabilities option.
We hope that you’ve found this article to be helpful, including Worker’s Compensation costs – regardless of how they are based – is an important part of your job costing.
