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awurts
June 10, 2021
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Changing an employee's vacation policy

  • June 10, 2021
  • 1 reply
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I have 2 salaried employees with the vacation policy: 80 hours (accrued on anniversary date). I want to change this to either accrued on Jan 1 or accrued each pay period. What are the implications of changing this in the middle of a fiscal period and after the employees have already begun to accrue vacation? Does QBO reflect the change retroactively or will I have to make manual adjustments to account for their previously accrued vacation?
Employee 1 has accrued 56 hours, $1350.04

Employee 2 has accrued 0 hours, $750.00

What are the manual adjustments I would have to do so that I can make this change now?

 

Best answer by Tammy_H

 

Hi awurts,

 

I'm glad you reached back out to get some clarity on this.

 

When you set up your payroll, you set up the vacation pay at 4%, 6% or 8%, depending on what your employees are entitled to. If you haven't adjusted anything, that will remain accurate as it was calculated on the earnings. The hours can be adjusted based on your policy and adjusted in your settings without posting to your vacation accrual account.

 

When you change the policy, it'll begin accruing according to that policy starting the next paycheque. The previous hours will need to be adjusted manually. This article contains a section with the steps for adjusting the hours or dollar amount, and it explains the entries that would be made: Accrue vacation in Payroll.

 

I'm also including this article that you can review: Vacation accrual FAQ.

 

If you need a helping hand, reach back out. Take care.

1 reply

J
JamesM4
June 10, 2021

Hello awurts,

 

Sometimes it's necessary to change your employee's vacation policy and I'd happy to steer you in the right direction so your balances are in perfect order. QuickBooks Online offers a versatile payroll module that simplifies the way you manage your vacation balances and other important factors pertaining to your payroll. 

 

Before proceeding, it's vital to keep in mind that any vacation accrual adjustments made to your hours will become a posting entry to your chart of accounts. I'd highly recommend contacting an accounting professional for more info on how to proceed with the adjustments. This ensures that your books remain accurate saving you time for the things you love. If you're not in contact with an accounting professional, you can reach out to one on our site using this link here. This article here does a great job at explaining what happens when you make adjustments and it also goes over how to make the adjustments on your account. 

 

I'd encourage you to check it out and let me know if you have questions by leaving a comment below. I've got your back. 

A
awurtsAuthor
June 10, 2021

Hi James

Thanks for the quick reply. My accountant is not familiar specifically with QBO payroll so he wasn't able to help me. Leaving adjustments to the side for now, as I understand that they post to various accounts in the background, can you please tell me what will happen if I change vacation policies for an employee? Will QBO re-calculate the correct accruals as if the new policy had been in effect from the beginning?

T
Tammy_HAnswer
June 11, 2021

 

Hi awurts,

 

I'm glad you reached back out to get some clarity on this.

 

When you set up your payroll, you set up the vacation pay at 4%, 6% or 8%, depending on what your employees are entitled to. If you haven't adjusted anything, that will remain accurate as it was calculated on the earnings. The hours can be adjusted based on your policy and adjusted in your settings without posting to your vacation accrual account.

 

When you change the policy, it'll begin accruing according to that policy starting the next paycheque. The previous hours will need to be adjusted manually. This article contains a section with the steps for adjusting the hours or dollar amount, and it explains the entries that would be made: Accrue vacation in Payroll.

 

I'm also including this article that you can review: Vacation accrual FAQ.

 

If you need a helping hand, reach back out. Take care.

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