Jaclyn Anku, ProAdvisor Training & Certification Leader: On today's episode of In the Know, we'll be exploring updates to QuickBooks Online Payroll. Now, hours allocated by project and classes in QuickBooks Time will flow automatically into QuickBooks Online Payroll through a new integration, saving you time and increasing accuracy.
Here's what to expect in this episode. You'll see the update in action and then hear from ProAdvisors Matt Skinner and Marie Green.
Hey, ProAdvisors, I'm Jaclyn, and you're watching In the Know. It's the show designed to keep you in the know on the most exciting updates to QuickBooks Online.
Here's the scoop. Previously, Quickbooks Online Payroll did not allow you to split an employee's wages across multiple classes, and the class information that was there didn't flow from QuickBooks Time into QuickBooks Online Payroll—not fun. So here's what we did. We've created a new integration that allows the hours allocated by projects and classes in QuickBooks Time to automatically flow into QuickBooks Online Payroll. For customers who don't use QuickBooks Time, you can edit the default classes that are set up in payroll settings, and all payroll customers can split an employee's wages or hours across multiple classes and projects right within the run payroll workflow. These classes and projects also flow into QuickBooks Online Reports or QuickBooks Projects, so all transactions with a particular class or project tag can be analyzed.
And now for the Fast Facts:
- These enhancements are available to QuickBooks Online Payroll Premium and Elite customers who have a QuickBooks Online Plus, QuickBooks Online Advanced, or Intuit Enterprise Suite plan.
- After the setting is turned on, you can access it from the run payroll, then edit classes and projects, then assign classes.
- This update has been live in the US as of September 2024.
If you find this update interesting or helpful, go ahead and like, comment, and subscribe.
All right, let me introduce you to Venky so that you can see the product in action. Venky, can you take us for a spin?
Vengatesh Muralidharan: Thank you Jaclyn for having me on the show. Let me take you through a quick demo of cost allocation in Payroll.
Let's look at how this works in practice. So when your employees send in time through the Workforce app, you will see them in the time tab on the left nav, under the tab time entries. Just to check what your employee has sent in, you'll see that green arrow here has sent 5 and 5, 10 hours toward one customer called test one and a class called account. For the hours from Monday, Tuesday, and Wednesday, 15 hours go toward a different customer called project one and class color. Similarly, your employee, John Doe, sent 16 hours toward one customer and one class. and another 24 hours toward a different customer and different class.
As you can imagine, employees would work on different types of customers, and different categories toward different projects, and can accurately tell how much of those hours went toward any given project. When they do that, all the information flows in, and you just have to approve it. Once approved, you'll see that this information flows in automatically to payroll, and you don't have to do any categorization yourself unless you want to.
So let me go ahead and run payroll for these employees. I have the two employees on the space schedule, Green Arrow and John Doe, and you can see that their hours have already flowed in. You can also check if their class and project assignments make sense by hitting on this button and run payroll. So I hit edit classes and projects, legacy, and all their hours have already flowed in. So their 15 hours go toward one class and 10 hours towards the other class. Similarly, for John Doe, 16 and 24 toward the two classes and projects.
Now let's say you don't agree with their assignments. You can split it. You can say that, hey, only 20 hours went toward this project, hit OK on the warning, split it to four hours, and assign it to a different class. So with that, you hit Confirm. When you come back to the run payroll screen, you'll see a summary of the classes and projects that are assigned to each customer to each employee. So once you hit preview payroll and run payroll, you'll notice that your payroll expenses are recorded with this categorization in place, which you'll find very useful when you're analyzing your finances.
So let's see how that looks. Inside QuickBooks Online, there's a lot of different types of reports, and one of the reports that's really useful is to run it by class. So let's say I run the Profit and Loss report by class. You'll notice that the payroll expenses for each of these classes is shown separately. You might have other invoices centers also, so everything is in one place and now you can analyze your profit and loss by this particular class. Let's say you want to retrace and find out why it's a particular number; you hit on these and you'll see all the transactions that came through.
So that's what I had for a walkthrough on payroll and cost allocation within QuickBooks. I hope you found that useful and thanks for taking the time.
Jaclyn Anku: Now that we've seen the demo, we'll turn now to ProAdvisors Marie and Matt for them to weigh in. So, Marie, Matt, welcome. Thanks for being here.
Matt Skinner: Hi.
Marie Greene: Thank you.
Jaclyn Anku: Awesome. Well, Marie, let me start with you. Maybe we can start from sort of the building blocks of this. When would you use this feature with your clients? And maybe you could give us an example.
Marie Greene: Yeah, 100%. We would use it with all the clients that need an allocation today that's done manually. So it can be a marketing agency where we need to track all of the profitability of each client. Those clients are also coded to separate classes departments in a way. We would use this for all the nonprofit clients, because they're mandated to track their time often, for sure, by class and by departments called programs, but also a lot of the time, we also want it by projects within the entire organization.
We also use it for medical offices. Sometimes we have shared staff, and we all know what a difficulty that creates for accountants because we want them [the client] to be able to split their time across multiple entities. So we can really start tracking their time, the hours they work, by project, by class, by department. This is game changing, and I'll give you an example of why I say that. We have a client that runs about 30 to 40 different projects a month. They have 45 employees. For me to give a report that says, here's the list of your clients, total labor cost this month, other expenses, and gross profit per client to the owner, I need to go into their practice management software, download a CSV file of all of their hours, and go to a separate file where I know what their average billable hour like per employee.
This requires doing a lot of fun Excel manipulations and pivot tables to then get to hire three new people. Now I need to go and find and create their hourly costs, right? So by the time I finish manipulating the data in Excel to get that data, then I have to manually record journal entries in QuickBooks so it can then be reported at each of the project levels. It can take anywhere from three hours if I do it, to six hours if the staff does it, so you would be saving us so much time by not having to do any of this manual work.
Jaclyn Anku: Wow, that's huge. That's a really compelling example. I was going to ask how this saves you time, but I think you've painted a very clear picture of the amount of time it takes and how this integration might help. Matt, I know your practice works with medical offices as well. Does what Marie said resonate for you, or would you use this in a slightly different way?
Matt Skinner: I think Marie's absolutely right. Payroll is a huge expense for everybody, and a controllable expense, generally, but as soon as the information is not accurately divided or accurately allocated, it's not as useful anymore, right? And so if you want to have it already set when you're running that payroll, make sure it comes all the way through so that whoever runs that payroll knows it's in the right place. They see the report that's in the right place. There's a lot less questions and a lot more value to it.
Jaclyn Anku: Okay, so I think you've both already touched on how do you get value out of the data that now pushes from QuickBooks Online Payroll into QuickBooks Online but Matt, can you build on that a little bit further? How does having this data help you be a better advisor to your clients?
Matt Skinner: Sure, with payroll, as important as it is to know where those buckets are by location, by department, or division, or whatever you're using classes to allocate out, every one of those operates independently or at least separately from the other ones. So when somebody says, “Hey, how are my restaurants doing?,” they might kind of wonder about restaurant A versus restaurant B. But if you've put all the payroll in the wrong place or it's all at the incorrect location, then all of a sudden you don't really have that information anymore. I think that in order for us to provide valuable, usable, actionable feedback, everything has to be accurate, and I think the less human touches on that, the higher the level of that accuracy.
Jaclyn Anku: Matt, Marie, thank you so much for sharing your insights and for being with us on the show, and thank you for watching this episode. I'm Jaclyn, host of In the Know and leader of ProAdvisor training and certification. Be sure to like, comment, and subscribe so that you don't miss a single episode. We'll catch you next time.
Meet the ProAdvisors
ProAdvisor Matt Skinner: Partner, Beaird Harris
ProAdvisor Marie Greene: Founder & CEO, Connected Accounting
