Title: Recording Unanet labor expenses and reconciling with payroll
Some clients want to record labor expenses from Unanet in their accounting system and offset those with the entry from their payroll system (gross wages). This may be handled by creating a liability in a Suspense Payroll account, which holds the offset from the labor expenses until the payroll entry is recorded.
Unanet records salary and wages costs from hours, while the payroll system will include gross wages which may include things that are not based on hours (bonus, commission, etc.). The Suspense/Clearing account will only include the hour-based cost and can indicate that these costs are from Unanet.
Other clients can record journal entries directly to Wages Payable.
What’s covered in this document:
If the client has a basic accounting set up, or very limited timesheet corrections, where most of payroll wages are based on hours in Unanet, there is no reason to have a Payroll suspense account. In this case, they can record the expense and create the liability for wages payable. Payroll then relieves the liability and records the disbursement of cash.
If there are a lot of corrections due to labor adjustments, you may wish to handle this with a Payroll Suspense account.
STEP 1: Create the Suspense Payroll Account
Create a liability account in the Chart of Accounts. This could be Payroll Liability or Accrued Wages, or a separate Zero Balance account (Suspense Account) for labor posting. The actual account name will vary by client, but some examples we have seen recently include: Payroll Liabilities, Accrued Salary, Accrued Wages, or Wages Payable. This account most commonly has an Account Type of “Other Current Liability”.
STEP 2: As part of recording the payroll entry, wages paid are reconciled against the Unanet labor cost
Under Accrual based accounting, the labor expense (gross wages or salary based on Unanet data) is posted to the General Ledger based on the timesheet period. This creates the “liability” and records the expense or cost of the labor. Then Payroll is run and recorded (usually with a lag) and the liability is relieved. The payroll entry will no longer record the gross wages or salary expense (only exception type payments, non-timesheet based like bonuses and commissions are recorded with the payroll entry).
It is common to have a Bank account type that is used as a clearing or zero balance account for labor corrections (moving hours and $ from one customer:job or item to another). In theory this account could be also used for posting the Unanet labor cost, but we do not recommend this.
In QB you could have a Bank Account "NONCASH", where the item tab of the checks in QuickBooks has the same fields as the timesheet and are reportable in the same transaction detail reports. This is why they are used for recording labor, expense, and labor corrections.
The export from Unanet would be:
- a Journal Entry export (debit is to the Labor Expense/project specific, credit is to Payroll Suspense/Wages Payable/Payroll Liability)
- a Check (zero dollar check because item tab records labor expense and expense tab records the liability.)