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

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

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

  • Sherry Ball says:

    on Profit $ Loss report via QB..under Payroll Expense category, I am getting a “payroll Expense-Other” category with my 2 employees names but zero showing up at the dollar amount (but I also have those employees under Payroll Expense-officer salary too. How can I delete the Payroll Expense-other” category/

    Thanks for your help!

    Sherry

    • Hi Sherry,

      “Other” accounts on reports are caused when you use a parent account rather than a sub-account on a transaction, in this case the Payroll Expense parent account. To remove it from your reports, double-click on the amount to the right of it and change the accounts on those transactions to a sub-account.