Question: I read your blog on the entering payroll from a service. I am still getting confused on the item lists to chart of accounts. With your example, it is a journal entry, but then how do I get the costs back to the jobs? Is that when I do a zero check entry?  Also, could you confirm if my account is set up correctly?  Example:  Concrete  03 Concrete (this is my main item, so I do not have it as a sub of anything) Purchase Info - 53600 Subcontrac COG // Sales Info 42600 Construction Income.  Then I have the CSI code as a sub of that:  03050 Basic Concrete - subitem of 03 Concrete Purchase info is 50400 Construction Material COG // Sale info constuction income.  Under that I put two sub items: Material Concrete this one has purchase info as 50400 constuction material COG.  Subcontract Concrete this one has purchase info as 53600 subcontract COG.  Is this correct? Does it matter that the main item has different purchase info than its sub items?  If this is correct? Would I then add an additional sub item, and call it labor for the work our crews do? And, if so, what purchase info would be appropriate? I would not have labor as a COG, would I?


Answer:
You can use different revenue and COGS accounts on sub-items, so you’re fine. Just make sure that you use an expense account for purchases, and an income account for sales (unless you’re a homebuilder, and need to accrue your cost of sales on the balance sheet, until a home is sold).

Our outsourced payroll blog post doesn’t cover job costing, because it’s always a nightmare, which is why I highly recommend switching to QuickBooks Assisted Payroll. It is useful for showing you how to start with the gross payroll and reduce it down to the net. If you want to use a check instead, enter the DR as positive amount and the CR as a negative amount. But, remember to get the payroll into the job costing reports. You not only need to break it down by employee and job, but also job phase (so you can use Items instead of Expenses). This is what makes job costing outsourced payroll so difficult.

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Written by Ruth Perryman, MBA, CMA, CFE, CFM

Ruth is the president of The QB Specialists, an Intuit Solutions Provider that has helped thousands of businesses nationwide get the most out of QuickBooks and payroll. Ruth has over 20 years of industry experience, including 5 years as a Chief Financial Officer. She is an Advanced Certified QuickBooks ProAdvisor and a member of Intuit’s Trainer/Writer Network. She is also certified in QuickBooks Enterprise and Point of Sale.

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