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Employees receive per diem compensation, a form of a daily stipend, to cover expenses incurred while on a work trip. Business expenditures basically include transportation, lodging, and food costs, along with other incidentals, etc. In other words, a per diem compensation structure pays employees on a daily basis rather than on an hourly or monthly basis.
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Why is it Essential to Set up Per Diem Payroll Items in QuickBooks Desktop?
When it comes time to accrue yearly business expenditures like meals, lodging, travel, etc., per diem payments, play a crucial role. Furthermore, per diems are immensely helpful for some job profiles that require a lot of travel. Thus, employers also provide them in the form of partial expense reimbursement, corporate credit cards, fixed daily rates, etc.
In contrast to full-time positions, such individuals are often employed on temporary or short-term contracts. The best examples of per diem-paid employees are substitute teachers and medical professionals.
What Are the Different Types of Per Diem Payments?
There are two different types of per diem payments. These are:
Fixed-Rate
Any company that uses a fixed per diem form of payment for its yearly costs typically pays the employee a certain sum of money every day.
Out-of-Pocket Expenses
Companies typically urge workers to submit all of their genuine claims when they are required to pay for their expenditures directly and without assistance. Companies permit reimbursement of the business expense if claims for out-of-pocket costs are approved.
The benefit of per diems is that they are completely tax-free. Only when a specific employee neglects to disclose any relevant information regarding an expenditure report are they subject to taxation.
How Do Per-Diem Payroll Items Help Businesses?
The per-diem payroll item that is created in QuickBooks offers significant help to businesses by:
- Offering incentives
- Meeting expenses related to work
- Offering a professional development
How Can One Setup a Per Diem Payroll Item in QuickBooks?
If you wish to set up a per diem payroll item in QuickBooks, then you have arrived at the right place. It is essential to create a payroll item in order to register a per diem payment. And then the particular amount is added to the paycheck.
Step 1: Click on the Workers Menu Option
You have to click on the Workers menu in the QuickBooks account and then opt for the Employees option.
Step 2: Choose the Particular Worker
Next, you have to choose the one individual (the worker) to open the profile of that person. This can be done on the Employees page.
Step 3: Choose the Pay Under Employee
Following Step number 2, you have to choose the pencil icon. Next, you have to select Pay under the employee details option.
Step 4: Choose the Additional Pay Types
You have to choose the additional payment types. This is essential to link in the section “How much do you pay this employee”.
Step 5: Specify the Amount in the Recurring Amount Section
Finally, you have to choose the Reimbursement and then specify the amount in the section labeled Recurring amount. Once you are done, you should click Done.
How Can One Setup the Bonus Payroll Item in QuickBooks?
You might not have the requirement to create a new item. You then have to abide by the steps to configure the payroll item in case of a bonus.
Step 1: You have to visit the QuickBooks menu and you have to click on the list tab.
Step 2: You have to select the Payroll from the list of options that are provided to you.
Step 3: You should then scroll down to figure out the payment item button. You can easily locate this on the bottom left of the screen.
Step 4: You have to then choose to click upon the “New” tab.
Step 5: You have to select Custom setup and following this, you have to click on Next.
Step 6: Next, you have to select the wage options and then click on Next.
Step 7: Following this, you have to choose Bonus, specify the name of the employee, and then click on Next.
Step 8: Next, you have to find out the expense account where you wish for an item to be tracked.
Step 9: Once you are through with the process, you should click on the finish button and your configuration will be perfectly set for a payroll item for bonuses.
The article highlights everything you need to know about setting up Per Diem Payroll Item in QuickBooks Desktop. You get to know the steps that you have to follow and why is it necessary and its benefits.
And if you have any queries regarding how to set up Per Diem Payroll Item in QuickBooks Desktop, You should get in touch with our Dancing Numbers expert team via LIVE CHAT.
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Frequently Asked Questions (Faqs)
How to Record the Per Diem?
In order to record the per diem, you have to follow the steps below.
Step 1: After selecting Payroll, choose Employees.
Step 2: Click to open after selecting the employee’s name.
Step 3: Choose + Add more pay types after scrolling down (like overtime and sick pay).
Step 4: Select Additional payment options.
Step 5: Next, choose the appropriate pay categories for the per diem. Choose Non taxable Per Diem if you like.
Step 6: Click Save, followed by Done.
How to Pay a Contractor with a Paper Check?
In order to pay a contractor with a paper check, you have to abide by the following steps:
Step 1: Select the Contractors tab from the Payroll menu.
Step 2: Select the contractor’s name from the dropdown menu that appears. Then, you should write a check.
Step 3: From the Corresponding account in the QuickBooks field, choose the expenditure account you employ to keep track of your paychecks. Your chart of accounts’ expenditure account is where QuickBooks records the expense. It is not the bank account from which the payment is debited.
Step 4: To submit the check to your print queue, click Save and Close.
What Are the Potential Drawbacks of Using Per Diem?
Only meal expenses incurred while traveling for work are covered by per diems for the self-employed, and for all firms, per diem reimbursements are not considered taxable income to the employee if they are less than or equal to the federal per diem rate.
Employers have to be aware of whether employees are committing expense report fraud.
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