Salary reduction in the middle of the year

I answered your question added to another thread. Here it is again:

@ALwood 

I don't think your case is unusual, though the reason behind it is. It's quite normal to change an employee's salary mid-year. Typically an employee will get a raise mid-year and you'll want paychecks going forward for the rest of the year to reflect the raise.

At the same time, QuickBooks (rather unfortunately) wants you to input an annual salary amount. This is true even though technically there is no such thing as an annual salary, at least in the USA. Salaries are fixed per-payroll-period, in a similar way that hourly wages are per hour. This is why professional companies quote a salary to the employees per period, like "Your salary every two weeks is $2000" and then they sometimes add, "which is about $52,000 per year." (It is about $52,000 per year, and not exactly $52,000 because there are not exactly 52 weeks in a year. But it is, exactly $2000 per pay period.)

So, when an employee's salary changes, then to update QuickBooks so that it pays the new salary in the following pay periods, enter the new annual salary as a product of the new per period salary * the standard number of periods in the year - based on your pay period. For example, for monthly multiply the per period salary by 12, bi-monthly by 24, every two weeks by 26, and weekly by 52. Going forward, QuickBooks will then divide the annual salary by those same standard amounts, depending on the pay period, arriving at the correct pay period salary for each new paycheck. This change will only impact paychecks going forward, and does not depend on or use any prior salary amount paid.