QuickBooks Job Costing When Using A Payroll Service

From the April/May 2008 Issue

Using ‘Zero-Dollar Checks’ to Record Payroll Costs by Job and Class If you use an outside payroll service to process your payroll, using zero-dollar checks may be the easiest way to record payroll expenses by job and/or class (department). This solution works really well for contractors or other businesses who need to track and manage labor costs at the job or department level, but who use an outside service to handle payroll.

Before going into the specifics of the solution, it is important to note that because the client will not be using any of the payroll features in QuickBooks, he or she won’t be able to use any of the QuickBooks payroll reports (e.g., Payroll Summary, Payroll Liability Balances) or any of the payroll tax reporting features. Also, this method only approximates (within a few dollars) the payroll costs for jobs and classes, meaning that the amount of payroll expense allocated to each job and class will be based on the average hourly payroll costs for each person in each job. Here are the steps for making this all work.