Project-based QBO customers can now track project profitability more closely using a new employee 'cost rate' feature without having to reply on third-party or manual solutions like spreadsheets.
QBO Plus and Advanced subscribers using QuickBooks Online Payroll can now use a new cost rate calculator that provides entry fields for common factors, including pay rate, benefits, taxes, insurance, and overhead expenses.
The new cost rate calculator will automatically populate employee pay types and rates from QuickBooks Online, and also convert salary amounts to hourly rates for cost computation. It typically defaults to the standard FICA rate (7.65%) when computing taxes for U.S. subscribers. Presently, the new cost rate calculator doesn't computer overtime costs as part of rate computations.
Once employee cost rates have been computed by the new calculator, they will be automatically applied to any employee time events added to Projects.
In case you are wondering what 'cost rates' are, a cost rate represents the total cost of an employee to a business.Typically this rate will include pay rate, benefits paid by the employer, insurance paid by the employer, taxes paid by employer, and overhead amounts related to employees.
The new calculator allows users to manually enter employee pay rates; however, if you previously added cost rates for employees in QBO Payroll, those rates will carry over into the new rate calculator. Similarly, the amounts you enter into the cost rate estimator tool for employees will be added to the cost rate for those employees in QBO Payroll, they will also be used to calculate employee time costs for Projects.
Using the Cost Rate Estimation Tool
This tool helps you estimate your hourly employee costs with the common factors that contribute to the total cost for an employee. Remember, the cost rate is the employer's cost; therefore, any costs the employee pays should be excluded.
The cost rate estimator tool calculates the cost rate as a per-hour amount. All amounts entered into the estimator should be on an hour basis, excluding taxes, which are entered as a percentage. Step-by-step instructions for entering cost rate data manually, or from QBO Payroll are described further below.
Factors Contributing to Employee Total Cost Rate
To Manually Enter Cost Rates
To Enter Cost Rates from Payroll
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