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Ben Jobson
May 13, 2021
Question

Quickbooks Desktop Payroll - Vacation Accrual

  • May 13, 2021
  • 1 reply
  • 0 views

Hi All,

 

I need some help. I'm getting confused with how Vacation is being accrued in Quickbooks Desktop. Below is an example of the issue I am having (This is using made up numbers).

 

Employee's yearly salary: $26,000

Number of Vacation Days: 10 days 

 

I am trying to calculate the vacation accrual at the end of a vacation year. the way I would calculate this is below. (Please tell me if I am doing this wrong)

 

Total hours in a year (40 hours a week): 2080

Therefore it would be $26,000 x 4% = 1,040

It would be bi-monthly payroll so 26 pay periods therefore for each pay period they would accrue $40

$1,040 / 26 = $40

 

Currently Quickbooks is calculating a holiday taken day as 'Daily rate times number of regular hours (8 hours)'

Therefore for above a holiday day is paid out at $100 a day.

26,000 / 2080 = $12.50 an hour. $12.50 x 8 hours in a day = $100.

 

My issue arises at year end when the vacation accrued ($1,040) does not agree to total holiday taken (10 days x daily holiday rate $100 = $1,000). I am left with a $40 owed to the employee.

 

What am I doing wrong here? The only thing I can think is either Quickbooks is calculating the daily holiday rate incorrect as it should be ($1,040 / 10 days = $104 daily rate) or that Vacation accrual is not calculated on Vacation take. Therefore the total salary for vacation day calculation would be $26,000 - 1,040. = $24,960 x 4% = $998.40 (this is alot closer to the $1,000 quickbooks will pay out over the year.

 

Can anyone explain this to me as I dont understand why I keep getting left with this difference at year end.

 

I am in BC and the government website says that Vacation should be accrued on any amounts earned by an employee this includes Vacation pay.

 

Thanks

1 reply

T
Tammy_H
May 13, 2021

Hi Ben Jobson,

 

That's a great question. Vacation accrual can be intricate because each province has its own legislation that must be followed. Your QuickBooks Payroll module is in alignment with the government labour regulations. Let me explain why the vacation pay is not going to equal the 40 hours x hourly wage amount.

 

Vacation pay is calculated at 4% of what's paid to your employees. If you have a standard 40 hrs of vacation available for your employees to take, you'll have a balance at the end of the year. So if your employee's salary is $26,000 per year, it is actually $26,000+4% per year. Often employers will pay out the remaining balance at the end of the year, and others will pay out the total vacation pay when the employee takes their vacation. How you choose to handle the remainder is up to you. Here's an article that goes through the accrual process: Set up vacation pay and accrual (CA only)

 

If there's anything else you require assistance with, reach out. Take care.

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