How to Create a Separate Payroll Expense Account for Each Employee in QuickBooks Payroll |

How to Create a Separate Payroll Expense Account for Each Employee in QuickBooks Payroll

Published 08/27/2010 |

We are a small non-profit with 6 people on the payroll. I would like to keep track of payroll expenditures for each employee, but I am having a hard time categorizing them properly. For example, the different paycheck expenditures (wages, social security, taxes, etc) for our employees Lewis are all put under:

6560 Payroll Expense–Other

My payroll categories looks like this

6560 Payroll Expenses

        Salary Expense–Employee A
        Salary Expense–Employee B
        6560 Payroll Expense–Other

                Total 6560–Payroll Expenses

This is very frustrating as the majority of payroll expenses are lumped into 6560 Payroll Expenses–Other. I would like the paychecks to be allocated more like this

6560 Payroll Expenses

        Salary Expense–Employee A
        Salary Expense–Employee B
        Salary Expense–Employee C
        Salary Expense–Employee D

                Total 6560–Payroll Expenses

Do you have any suggestion how I can do this?

Anytime you see a "-Other" on your reports, it means the parent account was used in a transaction instead of the sub-account. In this case, it's "6560 Payroll Expense". You can set payroll up your payroll expenses go to sub-accounts, and there are often good reasons to do so (i.e., you have some employees posting to cost of goods sold and others posting to general expenses).

However, I usually don’t recommend having separate accounts for employees on your chart of account. Instead, I recommend getting the detail you’re looking for by drilling down on reports. For instance, if you click on your payroll expense account on your Profit & Loss report, you can sort or even total the transaction listing by employee. There are also several useful reports in Reports > Employee & Payroll. Make sure to check out the More Payroll Reports in Excel option.

I do, however, sometimes recommend having separate sub-accounts for benefits and payroll taxes because it makes reconciling much easier. It would look something like this:

Payroll Expenses
   Wages
   Payroll Taxes
      Federal
      State
   Benefits
      Medical
      Dental
      Retirement

You can change the payroll expense account used for your existing payroll items by going to Lists > Payroll Items, right-clicking on the item you want to change and selecting Edit Payroll Item. The expense account is on the second screen.

If you must have separate payroll expense accounts for each employee, you'll need to setup a separate payroll item for each employee mapped to their own payroll expense account. Go to Lists > Payroll Item List, click on the Payroll Item button and select New. Go through the payroll setup wizard, making sure to select the payroll expense account you want to use.

If you choose to use one payroll expense account for your employees instead of separate accounts, as recommended, you'll probably want to merge the separate payroll accounts into your main payroll expense account. Go to List > Chart of Accounts. Right-click on one of the employee payroll accounts and select Edit Account. Uncheck the Subaccount Of box and change the name of the account to "Payroll Expenses". If the name exactly matches, you'll get a warning "This account is already being used. Would you like to merge them?". Select Yes to merge the accounts.

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This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.

Ruth Perryman - QuickBooks Specialist Written by +Ruth Perryman, CMA, CFE, CFM, MBA

Ruth is the president of The QB Specialists, an Intuit Premier Reseller that offers huge savings and expert advice on QuickBooks POS and QuickBooks Enterprise. She is an Advanced Certified QuickBooks ProAdvisor and a member of Intuit’s Trainer/Writer Network. She is also certified in QuickBooks POS and QuickBooks Enterprise and has provided expert QuickBooks help to thousands of businesses all over the world since 1996.

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