QuickBooks Payroll Bulletin | July 2009

Tips for Summer: Accounting for Vacation Time in QuickBooks

As summer heats up, your employees may want to use some of their vacation time. Intuit QuickBooks Payroll can help you track the vacation benefits you pay out to both your salaried and hourly employees. It also can help you track sick pay or PTO.

To pay out vacation and sick benefits in QuickBooks, you need to create separate payroll items for vacation pay and sick pay. Setting up these payroll items will distinguish vacation and sick pay from regular pay in your payroll reports and on employees' paychecks—and help you track the amount of vacation and sick time your employees take.

To set up the sick and vacation payroll items in QuickBooks Pro and Premier:

  1. Click the Lists drop-down menu on the top menu bar, and then select Payroll Item List.
  2. Click the Payroll Item button in the bottom left corner, and then select New.
  3. Select Custom Setup, and then click Next.
  4. Select Wage, and then click Next.
  5. Select either Annual Salary or Hourly Wages depending on if you are setting up these payroll items for salaried or hourly employees, and then click Next. (If you have both salaried and hourly employees, you will need to complete this set of steps for salaried employees and then for hourly employees.)
  6. Select Sick Pay or Vacation Pay, and then click Next.
  7. Name the item (for example: Hourly Sick Pay), and then click Next.
  8. Select the expense account that you want this item to report to.
  9. Click Finish.

To set up the sick and vacation payroll items in QuickBooks Simple Start:

  1. Click the Payroll icon and then select Go to the Payroll Center.
  2. Click Setup and Maintain, and then select View/Edit Payroll Items.
  3. Under Related activities, click Add a Payroll Item.
  4. Select Custom Setup, and then click Next.
  5. Select Wage, and then click Next.
  6. Select either Annual Salary or Hourly Wages depending on if you are setting up these payroll items for salaried or hourly employees, and then click Next. (If you have both salaried and hourly employees, you will need to complete this set of steps for salaried employees and then for hourly employees.)
  7. Select Sick Pay or Vacation Pay, and then click Next.
  8. Name the item (for example: Hourly Sick Pay), and then click Next.
  9. Select the expense account that you want this item to report to.
  10. Click Finish.

Paying Employees Vacation or Sick Time

When you pay your employees who have taken vacation or sick time, you will use the vacation or sick payroll items on their paychecks instead of the regular hourly or salary payroll item.

To add the sick or vacation payroll items to a paycheck:

  1. On the Preview Paycheck window, click in the Item Name column under Earnings.
  2. Click on the drop-down arrow, and choose the sick or vacation item from the list.
  3. For hourly employees, enter an hourly rate in the Rate column and the number of hours in the Hours column.
  4. For salaried employees, enter the number of hours worked next to the regular salary earnings item in the Hours column and the number of hours paid for sick/vacation time next to the sick/vacation salary earnings item in the Hours column. QuickBooks will divide the salary rate accordingly once the correct number of hours is entered.
  5. Review the other information on the Preview Paycheck window and create the paycheck.

Read more about setting up and paying vacation and sick time.

Learn how to set up vacation and sick time accruals for each employee.

QuickBooks Payroll Bulletin
Editor: Lise Quintana
Publisher: Intuit
We welcome your suggestions and feedback! Unfortunately, we cannot respond to requests for change of address, technical support, or sales information.
E-mail us at payroll_editor@intuit.com