Classification of Payroll Expenses

How can you classifying your Payroll Expense into different departments?

2010_0708_employeeprofile To classifying your payroll expenses in QuickBooks, first you need to preset a class type in your employee profile. Under the Employee’s profile page, select ‘Payroll and Compensation Info’ from the ‘Change tabs’ drop down list, and then select a class type for this employee from the ‘Class’ field. In this case, we use ‘Sales’ class for this employee.

Starts your scheduled payroll as usual, the salary expenses such as Wages, Addition and Employer Contribution will be grouped into the correct class which has set in the employee’s profile. You can see the classification in the ‘Profit and Loss by Class’ report.

If you have set any ‘Deduction’ payroll item type in the employee’s profile, the deduction such as CPF Contribution by the employee will not class as according to the preset class type.

In QuickBooks, Class can only be use in Profit and Loss accounts and not Balance Sheet accounts.

Example: 

    Wages is $1,000.00 a month

    CPF Employer (Employer Contribution) is $145.00

    CPF Employee (Deduction) is $200.00

The double entry for this transaction will be:

    Debit: Wage Expense (Profit & Loss): $1,000.00

    Debit: CPF Employer (Profit & Loss): $145.00

Credit: CPF Payable (Balance Sheet, for CPF Employer): $145.00

Credit: CPF Payable (Balance Sheet, for CPF Employee): $200.00

Credit: Bank (Balance Sheet): $800.00

Therefore, when you presented the Profit and Loss by Class report, expenses such as Wages ($1,000.00) and CPF Employer ($145.00) will show in the report but not the rest of the payroll items that links to the Balance Sheet accounts.

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