Part 2 Contractor s Edition Workshop By: Penny Lane Crull
There are three options for processing payroll inside of QuickBooks: 1. QuickBooks Do it yourself payroll fixed yearly fee of $199 you are responsible for proper payroll set up and remitting payroll tax payments and government reports. QuickBooks Enhanced payroll for $349 with State Payroll Forms and Worker s Compensation tracking. 2. QuickBooks Assisted payroll Monthly rate starting at $59;mo, QuickBooks service will assist you with proper set up as well as remit payroll tax payments and government reports. 3. Using an outside payroll service QuickBooks Complete Payroll, Paychex or ADP, will handle 100% of payroll processing activity, including creating paychecks, tax payments and reports. I recommend the Enhanced Payroll subscription for Contractor s who are processing their own payroll and assigning their payroll costs to jobs. The accuracy and ease of use are well worth the extra cost. The QuickBooks assisted payroll is a good option for retaining your job-costing information by processing integrated payroll without the responsibility of dealing with the payroll tax and form remittance. If you are using an outside payroll service, my recommendation is to process payroll in QuickBooks through the QuickBooks payroll system and manually adjust the paychecks to match the reports from the Payroll service. In this case, you will need to be sure your payroll system is set up properly in QuickBooks as I will demonstrate below.
Exercise 4-1 Payroll Item Mapping 1. From the menu bar go to Lists and select Payroll Item List 2. Select the payroll item Hourly Job Labor and choose Edit Payroll Item from the payroll item menu. 3. Choose Next and verify that the Expense account chosen is 5210 the Costs of Goods Sold Account for Job Labor
Exercise 4-2 Set up Worker s Compensation (You must have Enhanced Payroll Subscription to use this feature) Worker s Compensation insurance is a significant labor burden cost for Contractors. If you are looking to get a complete labor cost by job, it is important to include this cost. QuickBooks 2006 or higher, combined with Enhanced Payroll subscription, simplifies your worker s compensation tracking for the purposes of job-costing as well as reporting. 1. From the Employee Menu, Choose Workers Compensation Set up Workers Comp. and Choose YES to Turn on the Workers Comp Feature 2. The Workers Compensation Wizard will appear, Choose Next to continue. 3. Select State Compensation Insurance Fund from the Drop Down Menu. 4. Next to Employee Mitchell, Clark, choose <Add New> from the drop down menu. 5. Enter the Workers Comp Code, Description and Rate from your State Fund Report, Click OK 6. The Code 5697 now shows up as the Default Code for Mitchell, Clark. Select, Next.
7. Based on our report, Choose option No, I do not use an experience modification factor and select Next. 8. Select yes, I pay overtime wages Next and choose No, I exclude overtime premiums from my calculations 9. Put a check mark next to Time and-a half to create an overtime payroll item and select Next (The system will create an overtime item automatically)
10. The payroll item name will automatically be named Workers Compensation, select Next. 11. Review your set up and select Finish. 12. We are not finished! Now, let s go to the payroll item list and change the mapping of the payroll items QuickBooks just created for us. From the List Menu Select Payroll Item List. Choose Overtime Rate and Edit payroll Item. 13. Select Next twice, and change the Expense account to 5210 Job Labor Gross Wages. Select Finish.
14. Return to the Payroll Item list, Select the Payroll Item, Workers Compensation, Edit Payroll Item. Click to Put a check mark in the Box Track Expenses by job, select Next. 15. Use the Drop Down menu to change the expense account to 5220 Workers Compensation Costs and select Finish. 16. You can access the workers compensation item list for adding or editing from the List
menu 17. You can run various reports for completing your Worker s Compensation reports and for Auditors from the Reports Menu.
Exercise 4-3 Using Time Sheet Entry for Payroll Processing You must enter your employee s time into QuickBooks Employee Time Sheet in order to run Time Reports. You can run Time reports by the job or by the individual in many useful configurations. Most Contractors find these reports very useful. Entering the employees hours on the time sheet also allows you to pull in the time onto the employee paychecks. When you have your employees use time cards that are formatted the same as QuickBooks time sheet entry, (see Time Card Template), your payroll entry process is simplified. 1. Verify that all of your employees are set up for Time Sheet Entry by Clicking on their name from the Employee Center and Selecting Edit. 2. Choose the Payroll and Compensation Info Tab from the Drop down menu. 3. Be sure the Use Time data to create paychecks box is selected. 4. Next, we will edit our preferences for our paychecks. From the Edit Menu Select Preferences Choose Employees and Payroll and click on the Company Preferences Tab. 5. For the Job Costing, Class and Item tracking for paycheck expenses, choose the option to assign one class per Earnings Item. Click OK to
Save preference. 6. From the Home Page Icon, or The Employee Center, Select Enter Time, Use Weekly Time Sheet. 7. Choose Mitchell, Clark from the Employee Drop down menu and select the date range of Dec 31 to Jan 6,2008 for this pay period.
8. Complete the Time sheet as below, choosing the Adams Rear Deck Job for the Customer Job for both lines. Notice that the service item for line one is 02.1 Demo Labor and the Service Item for Line 2 is 06.1 Framing Labor. Save and Close. 9. From the Employees menu, select Pay Employees. 10. In the payroll processing screen, chose the Pay Period Ends Date as 01/06/08 and the Check date of 01/11/08. Put a check mark next to the name of Clark Mitchell and Chris Pepper. Select Continue. 11. Select Open Paycheck Detail. This is what your paycheck should look like. Select Save and Close and on the next screen Continue.
12. Choose Create Paychecks to complete payroll processing
Exercise 4-4 Change Order Create a Change order for Additional Work [Reference page 5] 1. Go to the Customer Center and Select (by clicking once only) John and Lisa Adams: Rear Deck Replacement. Open the numbered 01-1013 by double-clicking.
2. Click in the Description area one line down from 01.5 Profit and Type in: Change order #1 dated 1/1/08: Remove and Replace Siding $440. Click on the Item number one space below and choose 02.1 Demo Labor from the Drop down list, tab over and type in $120, Select the Class Residential:Decks. Complete the other two lines from the change order. Your Screen should look like this: 3. Save and Close A warning message will appear as below select Yes. 4. Another Warning will appear as below Select Do Not Add
5. Go Back to the Customer Center and Open the Estimate by Double-clicking as in Step 1. Notice that the Change order appears just as we entered it and that the Total for the Estimate has increased. Exercise 5-1 Receive a Customer Deposit 1. Open the Item list from the List Menu. 2. From Item button select New. 3. From the Drop Down Menu, Select Service as the Type.
4. In the Item Name/Number Type Customer Deposit, Tab down to the Description and Type Customer Deposit. Tab over to the Account Field and from the Drop down menu scroll up until you see the Liabilities on the Chart of Accounts List and Select 2200- Customer Deposits as the account associated with this item. OK. 5. Go Back to the Customer Center and Select Adams, John and Lisa: Rear Deck Replacement by clicking on it ONCE. Select the New
Transactions Button and Choose Invoices from the Drop Down Menu. 6. When the Available Estimates Screen Pops up, Select Cancel
7. When the Billable Time/Costs Window Pops up, Select Exclude outstanding billable time and costs at this time and Click OK. 8. For the Item Choose Customer Deposit from the drop down menu 9. Enter the Price as 1000.00. Select Save and Close.
10. Notice the new invoice appearing in the Customer Center under Adams, John and Lisa: Deck Replacement for 1000.00. Exercise 5-2 Create a Progress Invoice for Detailed Item Estimate 1. Go to the Customer Center and Select Adams, John and Lisa: Rear Deck Replacement by clicking on it ONCE. Select the New Transactions Button and Choose Invoices from the Drop Down Menu.
2. When the Available Estimates Screen Pops up, Select Est. No. 01-1013 3. From the Next Pop up Window, Select the second Option, Create invoice for a percentage of the entire Estimate and enter 20 for 20% and click OK. 4. When the Billable Time/Costs Window Pops up, Select Exclude outstanding billable time and costs at this time and Click OK. 5. Your Screen should look like this. Notice that the invoice has populated with the information from our Estimate and that the Template has defaulted to Progress Invoice.
6. From the top of the Invoice Screen, Select Preview from the Print Button Drop down menu. 7. Exercise 5-3 Progress Invoice for Estimate Using Group Item
1. Go to the Customer Center and Select Adams, John and Lisa: Rear Deck Replacement by clicking on it ONCE. Select the New Transactions Button and Choose Invoices from the Drop Down Menu. 2. When the Available Estimates Screen Pops up, Select Est. No. 01-1014 3. From the Next Pop up Window, Select the second Option, Create invoice for a percentage of the entire Estimate and enter 20 for 20% and click OK.
4. When the Billable Time/Costs Window Pops up, Select Exclude outstanding billable time and costs at this time and Click OK. 5. Your Screen should look like this. Notice that the invoice has populated with the information from our Estimate and that the Template has defaulted to Progress Invoice. 6. From the top of the Invoice Screen, Select Preview from the Print Button Drop down menu. 7. Notice that the Item detail is hidden by the Group Item.
Exercise 5-4 Time and Materials Billing 1. Go to the Customer Center and Select Adams, John and Lisa: Rear Deck Replacement by clicking on it ONCE. Select the New Transactions Button and Choose Invoices from the Drop Down Menu. 2. When the Available Estimates Screen Pops up, Select Cancel 3. When the Billable Time/Costs screen Pops up, Choose the bubble next to Select the outstanding billable time and costs to add to this invoice and click OK.
4. From the next pop up screen, select the Options button and Select the bubble next to Combine activities with the same service item and rate and click OK. Then Click the Select All button. 5. Next, click on the Items Tab, put a check mark next to the item with the description Demolition Disposal, and the three transactions with the description Framing Materials and click OK. 6. When the Invoicing for Vendor Time Warning appears, Click OK. Notice that when we chose the items we were billing for from the above, we did NOT choose the Labor time from our sub-contractor, because we chose to bill for his time instead.
7. From the Invoice Screen, Click on the bottom empty line and select Subtotal from the drop down menu. 8. On the next line, select 01.6 Overhead from the drop down menu and tab over and enter 10% in the Price Each Column. Notice that the system calculates the Amount.
9. Repeat the above steps by selecting Subtotal for the item code under 01.5 Overhead and select 01.5 Profit for the next line, tab over and enter 10 % in the price Each column. Enter Rates for Labor in the Price each as 50 for the first two lines and 65 for the next two lines. Your Screen should look like this: 10. From the Print Button, Select Print Preview. The invoice is ready to print for the customer or for further customization of the Invoice Template
Exercise 4-1 Tracking noninventory materials used in a job To set up a new Adjustment Account in your chart of accounts 1 From the Lists menu, choose Chart of Accounts. Click on the Account button at the bottom and click New 2 In the Type field, select Bank and click Continue. 3 If you are using account numbers, enter 1111 in the Number field. 4 In the Name field, enter Adjustment Register. 5 Click Save & Close. If the account already exists, click Cancel.
To allocate a portion of the bulk goods to a specific job 1 This procedure records a check with a zero amount in the Adjustment Register, but allocates the cost of the items used on the job to the appropriate job cost report. 2 From the Banking menu, choose Write Checks. 3 In Bank Account, select the Adjustment Register account. 4 Enter the date the material was used, in this example leave the default date as is. 10.Skip the Pay to the Order of field. 11.In the Memo field, enter a description of the materials used, for example 2 paint brushes 12.Click the Items tab and select the correct item, in this example select Painting, enter 2 as the Qty, 3.50 as the Cost, the amount will auto-calculate, enter Dan Tedford:Addition as the Customer:Job, and Materials:Job-Related as Class. 13.On the next line, fill in the exact information as above but with a negative quantity and without the Customer:Job. Your screen should look like the following:
16.Go to the Reports menu and select the Job Costs Detail report.
17.In the Dates field, select This Month-to-date. Scroll down to the bottom of the report and notice that the charges for the paint brushes have been recorded against the Tedford, Dan Addition. 18.Close the report and click No when QuickBooks asks if you want to memorize this report.
Exercise 5-6 How to Access Job Cost Reports 1. From the Reports Menu, Select Report Center. 2. There are two areas of special interest to Contractors Jobs, Time and Mileage and Contractor.