QuickBooks Payroll Tip – Tracking Union Fringe Benefits
Setting up and tracking Union Fringe Benefits in QuickBooks can be a fairly straightforward task, after all Union Fringes are just a specified hourly dollar amount that the company pays to the Union on behalf of the employee.
Union fringes often consist of contributions to Vacation/Holiday, Health & Welfare, Pension, Training, and sometimes Travel & Subsistence, Savings, or Fund Administration. Depending upon the Union that you are dealing with, some of the fringe benefits could be subject to payroll taxes, while others are not.
Most of the time fringes are calculated and paid based on the number of hours the employee works on the jobsite, occasionally, however, they are a based on a percentage of gross pay.
Regardless of how they are paid (based on an hourly amount or a percentage of gross) or if they are taxable or not; in QuickBooks, each of these specific types of hourly fringe benefits should be set up in the Payroll Item List as Company Contribution items.
Now that you know some basic information about Union Fringe Benefits and how you would track them in QuickBooks, let’s take it a step further and explore some of the more complex issues.
Not every employee will have the same fringe benefit package or the same fringe benefit rates. This is where it becomes more complex. So before you begin setting things up in QuickBooks; take the time to plan things out and ask yourself these questions:
- Do my employees ALWAYS perform work under the same Work Classification/pay rate/fringe rate combination?
- Is the Work Classification/pay rate/fringe rate combination the same for all the jobs that employees work on?
- Is the Work Classification/pay rate/fringe rate combination the same for each of our employees?
Below are basic setup instructions if ALL of your employees fall under a single Work Classification/pay rate/fringe rate combination, nothing changes from job to job. In QuickBooks:
- You create company contribution items for each specific fringe benefit.
- Check the “Track expenses by job” option in the item setup.
- Create or choose the Union from the Vendor List.
- Assign appropriate Payroll Liabilities account, personally I like to create a Sub-Item of Payroll Liabilities called Union Fringes, and then create Sub-Items under that for each fringe item – it just makes it easy to see what your liability for each fringe item is at any given time.
- Assign the appropriate Expense or Cost of Goods Sold Account to record the company payments; personally I like to create a Sub-Account of Cost of Goods Sold called Union Fringes.
- Choose the applicable Tax Tracking Type, based on the information you’ve received from the Union Hall.
- If a specific fringe benefit is subject to payroll taxes, check which taxes are to be calculated on the Taxes window
- Select how the calculations are to be be performed. If the fringe rate is paid on all straight time and overtime hours worked, choose “Calculate this item based on hours”.
- Enter the hourly rate for the benefit item and make sure that the Annual Limit option is NOT checked (by default QuickBooks always has this option selected.
- Edit employee records and add the fringe benefit company contribution items to the Payroll & Compensation Information tab in the Additions, Deductions and Company Contributions section.
- When you create paychecks, QuickBooks automatically calculates the amounts for each employee.
Use the instructions above as a guideline for your QuickBooks setup.