It’s easy to track sales of goods in QuickBooks. You create an invoice or a sales receipt, select the product the customer wants along with the quantity, and save the transaction. QuickBooks reduces the corresponding inventory level and records the purchase in the correct account.
Accounting for services sold, however, is a bit more complicated. Whether you’re charging customers for consulting, labor, or any other task that gets billed by the hour, you have to both create records for that billable time and track the hours spent on it carefully. QuickBooks provides tools that simplify both chores.
You’ll use those same tools if you need to record the hours that employees work for payroll purposes. QuickBooks allows you to track time in individual records and/or traditional timesheets.
Here’s what you need to know:
Before you can start tracking time, you’ll need to make sure that QuickBooks is set up for that job. Open the Edit menu and select Preferences, then click on Time & Expenses. With the Company Preferences tab highlighted, click the button in front of Yes under Do you track time? if it’s not already filled in. Click the down arrow in the field next to First Day of Work Week to open the list and choose the correct day. If it’s appropriate, check the box in front of Mark all time entries as billable. Click OK.
Figure 1: QuickBooks needs some information from you before you can start tracking time.
While you’re still in the Preferences window, click on Sales & Customers, then My Preferences. When you create an invoice for a customer that has unbilled time, QuickBooks can open a window listing the billable services (Prompt for time/costs to add) or display a small box asking you whether you want to include those items (Ask what to do). Select your preference or Don’t add any, then click OK.
Individual Time Entries
Le’’s look first at creating individual time entries. Click the arrow to the right of Enter Time on the home page (or Customers | Enter Time) and select Time/Enter Single Activity. In the window that opens, make sure the Date is set to the date the service was provided (if that is different from the current date that appears). Click the down arrow in the Name field and choose the correct employee, and in the next field, select the Customer:Job.
Warning: If this work was done for a specific job, be sure to click on the actual job, not the main customer entry.
Figure 2: The Time/Enter Single Activity window.
Next, select the Service Item, the actual work that the employee did. Below that, you can either enter the Duration worked manually, or click Start to launch the automatic timer. If the work is Billable, be sure to check that box in the upper right. Add Notes if you’d like.
The Payroll Item (pay type) and WC Code (workers’ compensation) fields will only appear if you have QuickBooks set up for payroll. If this is the case, and you don’t see those fields, minimize the Time/Enter Single Activity window by clicking in the small horizontal line in the upper right. Click Employees in the toolbar (or Employees | Employee Center) and double-click on the name of the employee. Click on the Payroll Info tab to the left. You’ll see a line toward the bottom that says Use time data to create paychecks. Check that box and click OK, then reopen the Time/Enter Single Activity window by clicking the double box icon in the lower left of the screen. The two fields should be there.
When you’ve completed all of the fields required, save the time entry.
Note: Are you still doing payroll manually? It is much easier to track time and pay employees if you’re doing payroll through QuickBooks, but setup can be complex. It may be easier to guide you through the process, so please call if you’d like assistance with this.
Creating time entries isn’t difficult, but it can be time-consuming if you have a lot of employees being paid by the hour. Next month, the topic will be the QuickBooks’ Timesheet features well as how to get information about the time entries you’ve created and what to do if QuickBooks’ time-tracking isn’t robust enough to meet your needs. In the meantime, don’t hesitate to call if you need help with QuickBooks or your accounting in general.
Using a Timesheet
QuickBooks offers another way to enter time records that is especially useful if you have multiple employees and a lot of work hours to track. Open the Employees menu and select Enter Time | Use Weekly Timesheet. You can also get there by clicking the down arrow next to the Enter Time icon on the home page. This screen resembles a paper timesheet, with columns for all of the information you would enter if you created a single activity.
At the top of the screen, click the down arrow next to Name and select the correct employee. To the right of that is the Week Of field. If you need to change the dates, click the small graphical calendar, then click anywhere in the correct week. If you have already created individual records for that employee during that week, the information for each will appear in the corresponding date column at the end of the row. And anything you enter on the Timesheet will also appear as an individual entry.
To create a new entry on the Timesheet, click the down arrow in the Customer column and select the correct Customer:Job. Next, choose the Service the employee provided by again clicking the down arrow in that field. You want to be sure that the Payroll Item code is the right one, so choose carefully there; the WC Code (Workers’ Comp) should fill in automatically. Enter Notes if you’d like, then the number of hours the employee worked for that customer for that service in the date column. Be sure to click in the Billable box to create a checkmark if the service was billable.
Figure 3: Any data you enter on a QuickBooks Timesheet will also appear as a Single Activity, and vice versa.
Totals for each column appear at the bottom. Save the Timesheet and repeat the process for any other employees as needed. These hours will now be available to you when you run payroll and bill customers.
Time Reports and Invoicing
QuickBooks makes it easy for you to see the time data you’ve entered. It offers four pre-formatted reports that tally this information in different ways. Open the Reports menu and select Report Center. Locate Jobs, Time & Mileage in the left vertical pane and click on it. Scroll down to the Time heading to see these four reports. They are:
- Time by Job Summary (tells you how much time your company spent on each job, broken down by services provided)
- Time by Job Detail (shows you the same thing, but includes employee name and billing status)
- Time by Name (lists employees and the hours they spent on each job)
- Time by Item (tells you how much time your company has spent on each service type, broken down by job)
When you open a report, you can double-click on any number in the Duration column to see the underlying detail.
When you create an invoice for a customer who needs to be billed for services provided, QuickBooks displays this message:
Figure 4: To make this standard procedure, check the box in front of Save this as a preference.
QuickBooks offers another way to bill for time and expenses that allows you to create invoices in batches. Open the Customers menu and select Invoice for Time & Expenses. In the window that opens, specify your Date Range, and make sure the Template showing is the one you want.
Click in the column in front of each Customer:Job you want to bill and then click Next Step. You can Review Billables to see details and Edit Options by clicking on those buttons. Click on Create Invoices and make sure each customer’s Preferred Send Method is correct in the next window before dispatching them.
QuickBooks’ time tracking tools may be all your company needs, but if you find them lacking, please call to discuss adding TSheets, an integrated solution that adds more advanced features. As always, don’t hesitate to call if you need help using any of QuickBooks’ own tools or with any other accounting needs.