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wsenti0
March 19, 2020
Solved

Vacation Time (PTO) - Reducing Balance When Running Payroll

  • March 19, 2020
  • 2 replies
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Hi,

 

We are using QuickBooks Desktop and have been for many years. I came in recently to manage the accounting, including payroll.

 

I understand how Sick / Vacation Time Off (PTO) works, but I am trying to ensure it is configured to my needs in QB.

 

Our PTO policy is to max out at 320 hours with accrued PTO carried over from year to year.

 

I am trying to understand the following within our QB setup that does not entirely make sense to me:

 

  • We have two payroll items that are setup “Salary Personal Time” and “Hourly Personal Time”

 

  • Under earnings (lock net pay is on), when entering personal time used for a salary employee and selecting “Salary Personal Time” I do not see any reduction in the vacation time available in the upper right-hand corner. However, if I were to select “Hourly Personal Time” I do see such a reduction.

 

  • Secondly, is there a way to setup PTO liability accrual within the financial statements for QB?

 

At the moment I am looking to solve #2 as our previous bookkeeper mentioned only being able to “manually” enter the reduction in time for salary employees, which I do not believe is the best way to do this.

 

Happy to clarify everything further to get the direction / help I need.

 

Thank you.

Best answer by IamjuViel

Hi,

 

I am not sure why we have two different payroll items; this is what I am looking to figure out and understand.

 

I am trying to understand why / how these items function differently in that when using the item noted as “hourly” I actually see the hours reduce in the upper right hand and when using the “salary” payroll item they do not.

 

I was told by our previous bookkeeper that in order for us to reduce the accrued vacation hours for salary employees we must manually reduce the total hours by the number of hours used, which to me does not seem to make sense.

 

Regardless of whether you are on salary or paid hourly, if you use your vacation time it should automatically reduce what is left to use.

 

Can you provide any further clarity here?

 

Thank you.


I appreciate the complete details you've provided, @wsenti0.

 

You're correct, whether you use either of the vacation payroll item options it should decrease your employee's accrual. The previous bookkeeper may have set up the first vacation payroll item incorrectly. Let's first review how vacation time accrual is set up in your QuickBooks preferences and as a payroll item.

 

Here's how:

  1. Go to the Edit menu.
  2. Choose Preferences.
  3. Select Payroll and Employees.
  4. From the Company Preferences, select the Sick and Vacation button.
  5. Review the Vacatime time accrual details. 
  6. Click Ok.

Once completed, let's review the details of the two vacation time payroll items. It's possible that the Salary Personal Time ( Salary Personal Time – G&A, it’s the same) is set up as a regular payroll item.

 

Here's how:

  1. Go to the Lists menu.
  2. Choose Payroll Item List.
  3. Double-click on the Salary Personal Time – G&A, it’s the same salary. 

I've got here a screenshot to show you the difference between a regular salary payroll item and a vacation payroll item.

 

You can make the first payroll item inactive if it has the incorrect information.

 

Get back to us here if you have other questions.

2 replies

K
Kendra H
March 19, 2020

Thanks for posting your question here, @wsenti0. 

 

Before going into detail, I want to ask if your meaning your vacation isn't accruing on paychecks correctly?

 

If so, you can check the employee profile and also check to ensure the  "Do not accrue sick/vacation" checkbox isn't checked. 

 

Here's how to check the employees' profile: 

  1. Select Employees and then choose Employee Center.
  2. Double-click the employee name, and in the Edit Employee window, go to the Payroll Info tab.
  3. Select Sick/Vacation, then verify and adjust the following data as needed.

For more information about checking the payroll item on your QuickBooks Desktop account, you can refer back to this article: Sick and vacation time incorrect or not accruing on paychecks. 

 

I look forward to chatting with you soon. Have a good one!

W
wsenti0Author
March 20, 2020

Hi,

 

The vacation time is accruing (increasing with hours worked) just fine.

 

My question is that when we run payroll and an employee chooses to use available vacation time that our payroll items are setup properly.

 

It became apparent to me that we had two payroll item options in place for paying accrued vacation time

 

  • Salary Personal Time (ignore the Salary Personal Time – G&A, it’s the same)

 

  • Hourly – Personal Time

 

When selecting #1, once inputting the hours, the vacation available does not reduce by any amount, whereas when selecting #2 it does.

 

I was told that I needed to manually adjust the hours in the upper right corner in order to properly reflect the vacation hour balance.

 

We are trying to revamp our recording of vacation time to eventually actually accrue the liability in the financial statements, possibly generated automatically as opposed to tracking outside of QuickBooks and doing general journal entries.

 

Can you provide further insight?

 

Two screenshots attached.

H
hippIam1
October 14, 2022

I'm not going to give you a definitive answer, but just thinking through this, my guess is that the vac/sick accrual is based on hours.  Salary is not based on hours, therefore it isn't going to work.  For example, when a salaried employee is terminated during the middle of a payroll period, you have to calculate what his "hourly" rate is, add that as an item and make your entry in hours.   If you want the vac/sick accrual to work, you will have to set your your item name to salary, but put the type in as Hourly Wage.   When doing the entry for the payroll period you will have to deduct the PTO hours from the standard hours so that the total hours are always the same.  In short, I don't think QB is designed to track salaried vacation.  It would be easier to track it separately in Excel or set it up as hourly in QB which is more hassle than it's worth.  

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