If an employee is leaving, how do you record pay for the leftover PTO earned?

I can guide you with the procedures @ accounting463!

When an employee no longer works for you, you can process the final paycheck to cover their remaining wages, including the remaining PTO earned.

You’ll need to determine the remaining balance of vacation/sick after the pay period before you can record them. Here’s how:

1. Go to your Payroll menu and then select Employees.
2. Click Run Payroll.
3. Select the employee by checking the box beside their name and click Preview payroll.
4. Select the Pencil icon next to the Net Pay amount.
5. Under the Time off section, take note of the remaining balance.
6. Select Cancel to go back to the main payroll screen.

Then, you can run payroll as normal to settle the remaining PTO hours. This only applies if your employee is paid hourly. Otherwise, you'll want to change them from salary to hourly. This way, we can ensure the PTO hours add to the gross.

First, divide the employee’s salary amount by the number of work hours in the salary period. See the sample below:

• Per Year: 2080 hours
• Per Month: 173.333 hours
• Per Week: 40 hours
• For example, an employee paid $10,000 per month earns 10,000/173.33 = $57.69 per hour

After, you can set the employee’s hourly rate to the amount in the first step. I’ll show you how:

1. Click Payroll, then Employees.
2. Select the employee's name, then click Edit in the Pay types section.
3. Change the rate from salary to hourly, then enter the hourly rate you calculated.
4. Press Save.

Once done, you can now run payroll. Make sure to enter all other types of pay and the PTO hours left.

Please know that QuickBooks Online Payroll doesn’t have an automatic vacation or sick payout feature for your employee’s final paycheck. Depending on how your vacation policy accrues, you may notice the final vacation balance on the pay stub isn't zero. You can add or subtract the hours before the final process to correct this.

You can update their status right after to remove them from your active employee list. Doing this prevents you from getting billed for them anymore.

If you need additional assistance in handling payroll, please let me know. I’ll be more than happy to help. Take care, and have a great day!