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 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.
Right click the image to enlarge it
- 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:
Right click on the image to enlarge it
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.
Payroll is an essential part of your business – not just a weekly, bi-weekly, or monthly annoyance. Payroll is the primary way that employees are rewarded for good job performance and retained. If you are issuing late or incorrect paychecks it can lead to dissatisfied, unmotivated workers – or worse. It’s hard to keep good employees when a company gets payroll wrong.
The relationship between employees and employers is highly regulated by the government and many of these regulations involve payroll. There are literally hundreds of things that you have to know, as well as hundreds of mistakes that you can make. As a result, the payroll process is much more complicated than anyone who has never done it can possibly know.
The consequences of some mistakes can be more serious than just your paychecks simply being incorrect. Many mistakes result in getting a very hard time from people you don’t know (and certainly don’t want to know) – the federal and state enforcement types.
Below are 7 of the most common payroll mistakes which occur during payroll processing.
1. Poor Data Gathering
Payroll errors – overpayments, underpayments, misclassification, and job costing errors all start with the information that is contained on employee timesheets that is in turn given to the person responsible for inputting that information into QuickBooks, who then creates the final employee paycheck.
2. Improper Overtime Payments
Everyone knows hourly employees get time-and-a-half after 40 hours of work a week. Right? Not always!
Employees must be paid according to all the mandates of the Labor Department and the states. Are you calculating the overtime rate properly?
- A very common small business practice is granting compensatory overtime or “comp time” (time off) instead of paying overtime as legally required. This is illegal in most situations. Under the FLSA for example, only state or government agencies may legally offer comp time and, even then, it is subject to a long list of exclusions. Some states do allow it, but it’s certainly tricky!
Overtime is not always 1.5 times the employee’s hourly rate!
- You may have to add in other payments, such as production bonuses, shift differentials, prevailing wage fringe benefits in order to determine the overtime rate.
You must follow any state Wage and Hour regulations if they are more generous than the federal rules.
3. Ignoring Other Taxable Items
There will be times when you need to withhold taxes from more than just the employee’s normal wages.
All gifts, prizes, bonuses, and awards that employees receive are taxable, including the use of a company car.
Some Union Fringes are taxable, such as a Vacation or Health & Welfare fringe. These items should be included in the employee’s normal paycheck and set up as a taxable company contribution item type.
4. Mishandling Garnishments, Levies, or Child Support Payments
Part of your company’s payroll activities may include having to withhold and pay money your employees owe to a third party.
The government decided, long ago, that the best way to collect certain court-ordered or court determined debts was to go directly to the person’s source of income – you, the employer – and collect the money directly from the employee’s wages.
This can be a quagmire for employers of every size. There are rules for withholding, for how much an employee must be allowed to retain, and for which one of multiple claims are paid first. Naturally, the states do get involved, usually requiring that child support be paid first. But, if a federal tax levy arrives at your office first, it is paid first.
5. Mixing Reimbursed Employee Expenses with Normal Payroll
Many times I’ve seen employees bring in receipts or expense reports and the payroll clerk has added those reimbursements into the normal employee paycheck.
Don’t let yourself get caught in this situation – as you could have some “tall explaining” to do later and in some states there is a fine attached for just this sort of situation. An employee’s paycheck is just that – his compensation for the hours that he worked for you on a weekly basis and that is what should be reflected on his weekly paycheck.
If an employee submits receipts or an expense report, cut a separate check just for that and keep that money out of payroll!
6. Miscalculating State Unemployment Tax
State Unemployment Tax is an employer-paid but state-run program and each state has their own set of rules.
One common mistake that I’ve seen employers make when there is a delay in Intuit receiving the necessary information from the tax agency is that employers feel that they need to do a manual adjustment to increase the liability. This is totally unnecessary as the payroll module will automatically catch up, without any additional help from you.
7. Missing Tax Deposits and Filing Deadlines
There are substantial penalties for missing deadlines, for depositing your payroll taxes and filing the required reports.
Nearly every payroll clerk in a large company has a calendar with all the deadlines for federal, state, county and municipal tax deposits and tax filing deadlines for the entire year. You must also report the earnings and withholdings of each employee, payment to contract workers, total withholding amounts and other information. If you don’t have such a calendar, you can set up “Reminders” in QuickBooks; but you will have to look at them. On a normal day-to-day basis you naturally have other things to worry about, but if you aren’t conscious of these deadlines, you’ll miss one of them sooner or later and be faced with a hefty penalty for late payment or reporting….plus interest.
You may also be required to use EFTPS (Electronic Federal Tax Payment System) for your payments.
Part 3 of Payroll Mistakes will cover common errors at year end.
