Table of Contents
Purpose
This article provides a step-by-step guide for expensing payroll when your accounting system is QuickBooks Desktop. We'll show you how to get payroll data from Aspire to create a journal entry in your QuickBooks Desktop system.
Check Before Expensing Payroll
If you are reading this article, you should have already:
Expensing Payroll from Accrued Payroll Holding to the Profit & Loss Statement
Payroll hours exported to QuickBooks Desktop each pay period are used to create payroll checks in QuickBooks. The gross payroll for these employees accumulates in the Accrued Payroll Holding Liability Account in QuickBooks.
Be sure to complete the QuickBooks payroll reconciliation before performing this process.
📑 Article Reference: The article, Payroll Reconciliation with QuickBooks Desktop can be found here.
To move the gross payroll from the Accrued Payroll Holding account in QuickBooks Desktop to the Profit and Loss Statement Labor Expense Account by Division, you will need to perform the following steps in QuickBooks Desktop:
Go to the Balance Sheet.
In QuickBooks Desktop, gross payroll will show in the Accrued Payroll Holding account. We’ll use this report to create a Payroll Journal Entry. Click into Accrued Payroll Holding.
We’ll need to customize this report to show specific employee names. We can do this by first clicking Customize Report.
In the Columns section of the pop-up window, unclick Name and click Source Name. Then, Click OK.
Next, enter the paycheck date, not the actual pay period, in the From and To fields. These will be the same date.
In Total By Field, select Class.
The report will look like the below:
We’ll now use these values within this report to create our Payroll journal entry.
Create a Payroll Journal Entry in QuickBooks Desktop
Date the journal entry by the check date.
Debit the gross dollars from each Class (division in Aspire) in the Transactions by Account list from above. For example:
Labor- Overhead
Direct Labor- Snow
Direct Labor- Maintenance
Direct Labor- Enhancements
Credit the Accrued Payroll Holding Account for the total dollars debited.
After the journal entry is completed, the Balance Sheet Accrued Payroll Holding account should be $0.00.
Adding Additional Details for Indirect and Overhead Labor
If you would like to enter more detail on your Profit and Loss Statement for overhead labor expenses, instead of coding all overhead or indirect gross payroll to one overhead or indirect expense account, you will need to create an Hours Pivot Report to properly summarize this information.
Use the Hours Pivot Report for Payroll Reconciliation that you created during the previous reconciliation process.
With that report, you will:
Drag your division all the way to the left into the row display header section and then filter your division by your overhead division.
Add service name as a row display header after Division but before Employee Name
You should see your report like the below:
Make sure that you choose the correct date filters:
Choose the correct Year at the Work Date Year filter.
Choose the correct month at the Work Date Month filter.
Choose the correct work dates at the Work Date filter.
If there are any employees or pay schedules excluded on the export, uncheck that employee at Employee filter or at Pay Schedule filter.
Click the arrow to the left of Overhead to expand the Overhead detail
Make sure the Total Labor Cost amount matches the Overhead dollar amount from QuickBooks Desktop.
From the pivot report, click Export to Excel.
Use your exported file to create more detailed journal entries in QuickBooks Desktop.
Entering OT Premium as an Indirect Labor Expense
📌 Note: This is an optional process and is not required! Aspire does not automatically cost OT premium to a work ticket which means it will also not show up on Profit & Loss statements in Aspire. Most customers expense to Cost of Goods Sold Labor and do not post it to an Overhead expense account.
For example:
If an employee is paid $10 per hour and $15 for OT, the OT premium is $5 per hour. The $5 per hour is not a job cost in Aspire. If an employee works 50 hours per week, and 10 hours is paid OT, the employee is paid: $550 (40 hours x $10) + (10 hours X $15) = $550.
Another way to think about it is (50 hours x $10) + (10 hours x $5) = $550. The $50 OT premium is not a job cost to work tickets and will not show on any of the Profit & Loss statements in Aspire.
The payroll journal entry from the Payroll Holding accounts will cost all of the $550 to cost of goods sold. If there is a need to move the $50 from cost of goods sold in QuickBooks Desktop to Indirect, you will need to do an extra journal entry.
If you are not expensing overtime premium to Cost of Goods Sold Labor, you will need to create a journal entry to back out the overtime premium dollars from your Cost of Goods Sold Labor and post it to the Overhead Expense Account where you want to code the overtime premium.
Use the adjusted Hours Pivot Report you used in the previous section. Filter to the entire Month instead of by pay period.
Like before, if there are any employees or pay schedules excluded on the export, uncheck that employee at Employee filter or at Pay Schedule filter.
Export your pivot report to Excel.
Use the exported report to create a Journal Entry in QuickBooks Desktop to lower the Cost of Goods Sold Labor and increase the indirect expense for the overtime premium.
Date the journal entry by the check date.
Debit your Indirect/Overhead – Labor-OT Premium.
Credit your COGS – Direct Labor.