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Quickbooks payroll service cost how to#
Quickbooks payroll service cost manual#

Smaller start-up contractors may use the old-fashioned manual data entry method to populate QuickBooks with timekeeping data. Most contractors will capture time data in a web-based timekeeping application, then utilize a data import methodology to automatically populate QuickBooks with employee time data. That time data must be brought into QuickBooks. To distribute labor costs in QuickBooks, time data must be captured by a timekeeping system.

Direct costs must be further distributed among final cost objectives.įinal cost objectives may be contracts or more granular, such as task, contract line item numbers, or units of production.

These include direct labor, compensated absence accounts such as holiday time and paid-time-off, overhead labor, G&A labor, and bid & proposal labor.

Labor costs must be distributed among various general ledger accounts.

There are two main concepts to understand in order to properly configure QuickBooks to distribute labor costs: This detail may be traced to timesheets and payroll records, and validated vis-a-vis allowability of charges and work authorizations.Ĭonfiguring QuickBooks for Labor Distribution

Labor category (for direct labor charges).

A Labor Distribution Report supports this audit trail by showing how labor costs recorded in the timekeeping system for a particular payroll cycle are distributed to cost objectives.Ī Labor Distribution Report, like the one in ICAT, will show the following direct labor charge detail for each contract, and indirect labor charge detail for each indirect account that accumulates labor charges: An auditor will verify the contractor’s labor distribution records reconcile with timekeeping/payroll records, and reconcile to labor subsidiary and general ledger accounts. To satisfy the SF1408 criteria, labor costs must be distributed across multiple general ledger accounts within the QuickBooks accounting system using the payroll function in QuickBooks. Each must be charged to the appropriate cost objective. Labor costs for employees performing overhead or general and administrative type functions will accumulate in the appropriate indirect labor account. Another worked 43 hours on the contract one week, and took 40 hours of PTO the second week. One employee logs 80 direct labor hours in a 2-week cycle on a single contract.

Quickbooks payroll service cost how to#

We’ll explain how to get started in this article.įirst, what are we trying to achieve for DCAA compliance? A labor distribution system charges direct and indirect labor costs to cost objectives or contracts according to timesheet data. To satisfy this requirement, QuickBooks Desktop editions can be used to distribute labor costs based on timekeeping data, whether or not the contractor uses QuickBooks Payroll. Item 2f on Standard Form 1408 (SF1408) requires the Government Contractor to have “a labor distribution system that charges direct and indirect labor to the appropriate cost objectives.”

There is one QuickBooks capability necessary for DCAA compliance that is not widely understood. And while QuickBooks does not allocate indirect costs for job costing, indirect costs can be automatically allocated to contracts using ICAT, the indirect cost allocation and reporting tool.

You can assign direct costs to contracts using the job-cost functionality in QuickBooks. You can organize the chart of accounts into a cost pool structure that segregates direct costs from indirect costs. Indeed, countless small businesses have springboarded their Government Contracting business with this strategy since we introduced this premise back in 2006. Government Contractors with a QuickBooks ® accounting system can satisfy the Standard Form 1408–Preaward Survey of Prospective Contractor Accounting System criteria to pass a DCAA Accounting System Review, and thus qualify for cost-reimbursement type contracts. Distributing a Government Contractor's Labor Costs in QuickBooks ®