You can use QuickBooks classes to classify your income and expenses by department, business office or location, separate properties you own, or any other meaningful breakdown of the business you do. We’ll show you how to track payroll using classes.
Consider the following when setting up class tracking
- Set up classes on the basis of the type of reporting that you want to do. And consider how you want to see your business segmented on reports.
- Set up a class such as “other” that you can use to deliberately classify transactions that do not fit into any specific class that you have defined.
- Do not use classes for two different purposes. E.g., do not create classes for tracking office locations in addition to tracking partners.
- Identify both income and expenses for each class you set up.
- Consistently enter the class information on your forms and registers to be sure that this information is valid and useful.
Set preferences for tracking payroll using classes:
Here’s how to set preferences for tracking payroll using classes.
- From the QuickBooks Edit menu, choose Preferences.
- Select the Accounting icon. Then select the Company Preferences tab.
- Select Use class tracking. Then select OK.
- If prompted, select Yes to save changes.
- In the Preferences window, select the Payroll & Employees icon.
- Be sure that Full payroll is selected in the QuickBooks Payroll Features section.
- Select Job Costing, Class and Item tracking for paycheck expenses.
- If you want to assign one class to an entire paycheck, select Entire paycheck.
- If you want to assign one class to each item on the paycheck, select Earnings item.
- Select Ok.
If you selected the Earnings Item payroll preference (so you can assign one class for each earnings item on a paycheck), the Preview Paycheck window will include a Class column. You can now assign a different class to each earnings item. If you selected the Entire paycheck payroll preference, your payroll expenses will be prorated by class on reports.
To identify how payroll expenses are distributed to each class, use the formula:
[Rate X # of hours]/ Total wages = percentage/rate of the peroration for each Class
Once you have chosen to report on payroll taxes by job and class, reports of expenses by job and class break down company-paid payroll expenses not only for salaries and hourly wages. But also for company-paid payroll taxes.
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