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Old 03-10-2017, 12:08 PM
gssmauna gssmauna is offline
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Tieing Labor to an account other than payroll expenses?

Good Morning,
I work with an electrical contractor - so 90% of our labor is billed to customer or is unbillable but job related. So the payroll account for that payroll item ties to the payroll expenses - which is COGS. If I made a different payroll item, could I tie it to something other than payroll expenses, say continuing education? Does that mess anything up with payroll taxes or any other processes in the background?
Thanks!
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Old 03-15-2017, 04:51 PM
Lorin Browning Lorin Browning is offline
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Talking

I have a client that does something similar to what you may be asking about. Since you have had no response and I don't know how to do what I think you are trying to do, I asked a client. Here is the response I just received:
"I am not certain what he is asking. We charge 100% of anything coming in related to the customer on the payroll check. When we look into the job profitability, we see all expenses. Then XXX bills the particular job number, and he adds a certain percentage to it. This would probably take into consideration gas, picking up materials, etc.
There are several accounts linked to the invoice such as service, inspection fees, credits due, etc.
Then that goes to that COA.
Do not know if I answered the question, I may just be rambling..."
The company is an electrical contractor.

Have fun
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Last edited by Lorin Browning; 03-15-2017 at 04:55 PM.
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Old 03-16-2017, 03:07 PM
BooksInVA BooksInVA is offline
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I would keep it as payroll expense. Continuing education would be something such as the fees for a class that you pay for and send an employee to.

You may want a different payroll item called 'Training' or something to that effect to differentiate the two, and at most a subaccount of payroll expense (although even that is getting a little more complicated than I would want to do).
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Old 03-18-2017, 09:21 PM
Lorin Browning Lorin Browning is offline
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I'm still at little confused about what you want. Let's continue with continuing education as an example.

But first one suggestion. You said that " So the payroll account for that payroll item ties to the payroll expenses - which is COGS." No. There is no necessity that a payroll item ties to cost of goods sold.
  • A payroll item could tie to administrative or management costs. FUTA, for example, is a payroll cost that usually doesn't tie to COGS.
  • Salaries for sales persons usually don't tie to COGS.
  • Officers salaries, especially the part that does not tie to production, don't tie to COGS.
  • Health insurance premiums withheld from an employee's salary do not tie to COGS
  • I don't know how big your company is but let's suppose you have an in-house maintenance person. His or her salary would not tie to COGS.
In other words, payroll items do not have to tie to COGS.

But back to continuing education:

I can think of only a few possibilities where one might try to run continuing education through payroll. I see only two relevant possibilities: (1) the employee is paying for the continuing education, or (2) the company is paying for the continuing education.
  1. If the company is withholding from the employee's check to pay for the employee's continuing education, then that would be an expense to the employee and a payable to the continuing education provider. The only way that amount would be withheld from the employee's check would be that the company is collecting fees from the employee to forward on the employee's behalf. That would not be an expense to the company; it would bring about a payable for the company -- a payable which is not an expense but would be a balance sheet entry.
  2. If the company is paying for the employee's continuing education, that would be an expense to the company but I just don't see how it would show up as a payroll expense at all. The company check would be to the continuing education provider and not an expense to the employee at all.
An example of something that would be an expense to the employee that could be withheld from his check is child support. And one tracks child support payments through the use of an payroll item for child support. That does not affect the employee's gross pay but does affect the amount of paycheck. Again, the amount withheld would be a payable to the company and, when paid, a debit against the payable. In other words, the child support item posts to a balance sheet account and not to an income statement account. To generalize, not all payroll items "tie" to expenses for the company.

I think your mention of continuing education may have been misleading. Is there another example of a non-COGS item that you want to tie to a payroll item?
.
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Last edited by Lorin Browning; 03-19-2017 at 12:43 AM.
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