At Peak Advisers, we’re thrilled to share some big news about QuickBooks Online Payroll (QBOP)! This new feature, long-awaited and previously only available in QuickBooks Desktop, is now live in the QuickBooks Online ecosystem. It's an update that promises to streamline your payroll process and simplify managing your business finances.

What’s new? Cost allocation in QuickBooks Online Payroll

Those using QBOP Premium or Elite can now effortlessly track payroll costs by customer, project, or class. This update allows you to assign multiple classes or projects to a single employee within a given pay period for any wage item. This means no more extra journal entries or manual workarounds!

Here’s a quick overview of what this feature offers:

• Multiple Allocations Per Employee: Previously, QuickBooks Online only allowed one class or project per employee per paycheck. This limitation often required additional steps to reflect payroll costs across different projects or classes accurately. You can allocate multiple classes or projects to each wage type within the same pay period.

• Automated Payroll Calculations: QuickBooks Online automatically calculates payroll taxes and contributions based on how wages are allocated. This feature significantly boosts businesses like contractors, who need to job cost their payroll accurately.

• Improved Profit & Loss Reporting: The new cost allocation feature feeds directly into the QBO Plus & AV profit and loss reports, making tracking and reporting expenses easier.

Real-world impact: A non-profit’s perspective

Lori Aveni, who works with nonprofit clients, shared her thoughts on how this feature makes a difference:

“For my purposes, it's mostly for my nonprofit clients, because they're required on their tax return to report their expenses and they have to split up by program, administrative costs, and fundraising costs. So it's nice if we can do as much of that upfront as possible… with the payroll, we always have to go back at the end of the year and say, ‘Okay, here's how much we're splitting to each of those three buckets.’”

This update simplifies the process, allowing nonprofits and other businesses to manage their finances more efficiently and accurately throughout the year.

Why this matters

For many businesses, particularly those involved in job costing like contractors or those in the nonprofit sector, accurately tracking payroll costs across different projects or classes is crucial. This new feature in QuickBooks Online Payroll Premium & Elite takes away the hassle and manual effort previously required, offering a more streamlined, efficient process.

At Peak Advisers, we’re here to help you make the most of these new tools. Stay tuned for more updates and tips on how to maximize your QuickBooks experience. If you have any questions or need assistance, don’t hesitate to reach out to our team!