We are a contracting business running QB2006. Our CPA told us that we should we need to change our COA to reflect payroll expenses directly related to completing jobs to be posted under COGS, (told us to change all accounts related to job completion for that matter) and that all other, i.e. Officer, Clerical, etc. continue to be posted under Payroll Expenses. For the life of me, I cannot figure out how to do this. Wouldn't it be a journal entry? Am I missing something?
A Journal Entry will change the current balances of the accounts but will not change the way future transactions are recorded.
If all payroll is currently recorded as "Payroll Expense", and you want to post only SOME of the payroll as COGS while continuing to post other payroll as Payroll Expense, changing the COA will not accomplish your objective. You will need to create new payroll items that are associated with COGS.
Considering your state of confusion I suggest that you ask your CPA for very specific and detailed instructions before proceeding. Including, for example, whether he wants you to change both historical and future data, or only future data. New payroll items will allow you to record future transactions correctly, but Journal Entries may be the most efficient way to change historical data. Next question: do you need to change historical data for each past month separately for purposes of comparative reports (separate journal entry for each month), or only for the current year-to-date, or only for the previous year? Don't mess around guessing what your CPA wants, or expect people here to make those guesses - ask him to be very specific. Heck, ask him to help - then it'll be HIS fault if it's not done correctly.
Good point, Allan. If by outside service, journal entries make complete sense and Payroll Items (in QB) are irrelevant. Then, of course, OP must look to the reports from the outside service and whether any changes are required at that end.
AH - of course - payroll item. No, not much confusion on my part, just a temporary lapse of the thought process. I did meet with my CPA, hence the change. I am very clear on what he wants, just thought I still knew how to accomplish the task within QB. I placed a call to him and also jumped on the NG. Thanks for the help. And of course, I should have mentioned that we process our own payroll via QB.
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