QBO Payroll Updates August 2024

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Hector Garcia: Welcome to the unofficial QuickBooks accountants podcast. I am joined by my good friend Alicia Cat Pollock, the original, the one and only Qbo Rockstar CEO and founder of Royal White Solutions.

Alicia Katz Pollock: And I have the privilege of collaborating with Hector Garcia's CPA, the founder of Right Tool for QuickBooks.

Hector Garcia: Hi everybody. Before we get started, I just wanted to make a quick comment. [00:00:30] During the episode, Alicia and I go pretty deep in our thoughts about QuickBooks Online Payroll, and we might have alluded about the lack of ability to be able to create a paycheck in which you can split classes and projects inside the paycheck. Well, it turns out that literally two days after we recorded the episode, we started seeing a new button that allows you to edit classes and customer projects inside paychecks right before running [00:01:00] a payroll. So it's a brand new feature we have actually. Haven't seen anything written about it, but we're starting to see some QuickBooks files with this feature, so just keep that in mind. You may be able to see that button now in your payroll, even though in the episode we alluded that as non-existent and we are going to dedicate an episode just for that in the near future. Thank you very much. Let's get right to it. In this episode of the unofficial QuickBooks accountants podcast, we're going to talk about the August updates for [00:01:30] QuickBooks online. Now we're going to follow both the firm of the future article and the EndNote webinar that was recently published. Hey, Alicia, how are you?

Alicia Katz Pollock: I'm great. I'm always looking forward to the In the Know workshops every single month so that we can stay on top of all the changes.

Hector Garcia: That's right.

Hector Garcia: And Alicia and I are both obviously big QuickBooks nerds, and we're waiting for that article to pop up at the beginning of the month to see what new things they're showcasing. And this is probably historically the lightest [00:02:00] in terms of new feature updates that has ever been published. Now they frame it as, hey, it's the summer season. People are starting to get back to school. Extension taxes are starting, therefore into it. We're going to be so nice to you, accountants, and we're not going to throw a whole bunch of new things at you. So okay, that's fine. We'll take that at face value. However, the only really big thing that was highlighted was some recently updates to their entire philosophy on how to manage payroll [00:02:30] A QuickBooks Online Payroll. So we're not just going to talk about the new things that are changing in payroll. Alicia and I will actually make this a QuickBooks Online Payroll episode as well. So we'll go through and kind of our thoughts about QuickBooks Online Payroll versus, you know, the competitors like like Paychex, ADP, gusto, and kind of like where traditionally we've seen Cubio payroll as a better value proposition than those other guys and where now it sort of kind of like around [00:03:00] the same and then maybe some pros and cons. So Alicia, maybe you start. Okay. Let's talk about what was announced in the, in the In the Know webinar.

Alicia Katz Pollock: Sure. Yeah. Since we're going to spend most of the time talking about the payroll component of it, I actually just want to address some of the other things that they mentioned. So one of the things that they're pretty much always leading with at this point is that they have an arrangement with an app called figured that if you're managing agriculture, it's positioned as your go to app [00:03:30] for managing the agriculture because it synchronizes with Qbo. Now they're not really talking about it in the in the no webinars, but they're still pointing out that they want to make sure that people know that when you take on a new agriculture client, figured as your go to third party app. They also mentioned that on September 17th, they're having a webinar comparing fishbowl inventory with NetSuite. So if you do inventory with your clients, then that [00:04:00] would be a really good webinar to take a look at. So go to Intuit's website and take a look for the Fishbowl Inventory versus NetSuite um event. So I'm happy that they're having that. The next thing that they talked about was Proconnect tax and the prep for taxes and the book to tax adjustments tools that they it looked they talked about some changes that they made to it. But when Hector and I looked at it, we didn't see too much. That was [00:04:30] like, oh, we can identify this as a brand new workflow. And for most Proadvisors, you're probably not spending much time there if you're not doing taxes. But for those of you who do provide taxes, it's really important to know that there is a whole module inside Qbo that takes a look at the client's data and then puts it kind of in tax speak, allow you allowing you to map it to your tax forms, to look at where the numbers are, and to make [00:05:00] journal entries and adjustments to the numbers for your books to tax. And then you can either import directly into proconnect tax, or export the data so that you can import it into your tax tool of choice. Now, Hector, you're the tax guy. So what are your thoughts about that? Yeah.

Hector Garcia: So I think I think it's worth mentioning that we probably shouldn't just say that in passing. We should probably dedicate a whole episode on the books to tax workflow, not just talk about ultimately what you do with it. If you're going to prepare a tax return, [00:05:30] but there's actually some pretty cool tools in there, like a trial balance view where you can make or you can like sort of visualize high level adjustments. And maybe even if you don't do tax, you know, you want to visualize those adjusting journal entries and kind of see what the trial balance looks like before the adjustment and post the adjustment. So we'll dedicate a whole episode to that. And it will be relevant both for people that prepare tax and don't prepare attacks. Now, before we jump into the payroll stuff, I just want to add a quick comment about Intuit's posturing into [00:06:00] the mid-market. So they announced two things. And the the partnership with figured for the agriculture industry. We've already been hearing about this for months, but this was really interesting where Intuit is sponsoring comparing two apps that have nothing to do with Intuit Fishbowl Inventory and NetSuite. So why is that? Well, NetSuite is not going to integrate with QuickBooks. Netsuite is actually a QuickBooks competitor, but it's only a QuickBooks competitor in [00:06:30] what they're calling the mid-market, the higher echelon of small businesses, or the lower echelon of the sort of medium sized, larger businesses.

Hector Garcia: Now, Intuit's general thought is that NetSuite can eat their lunch with their QuickBooks enterprise clients that have not yet been able to successfully move to Qbo advance because of the lack of custom reporting, user permissions, inventory, [00:07:00] job costing, type of features, and Intuit has not been able to speed up the process of Qbo advance or like a QuickBooks Enterprise Online sort of version, to kind of fill that gap. And in order to protect themselves against the net suites of the world and maybe the Sage type products, you know, like Sage Intacct and some of these sort of mid-market products is Intuit needs to quickly fill that gap with third party app partnerships. So fishbowl [00:07:30] has been the app that for the last couple of months. Quickbooks has been mostly friendly with in terms of building a Qbo plus third party app alternative to a QuickBooks enterprise or a NetSuite type of solution. Because fishbowl focuses on inventory, which is one of those major industry types that gravitate towards QuickBooks enterprise. Now, they didn't mention Nephi, but Nephi is the other sort of semi partnership they had for construction. [00:08:00] So the larger construction clients. So you might want to take a look at fishbowl inventory. And Nephi, if you have a inventory heavy or construction client as an alternative to moving out of the QuickBooks ecosystem.

Hector Garcia: And again, you know, I actually very much welcome into it actually giving a megaphone to like the fishbowl inventory type companies and Nephi and other third party apps that are focusing on this ultra niche type of solution. Now, I will [00:08:30] warn you, and I'm a stockholder of Intuit and I'm not a stockholder of fishbowl, not a stockholder of Nephi, and probably will never be a stockholder of those two small companies, because I don't think they're going to go public into its goal is not to have a permanent lifetime partnership with fishbowl, or a permanent lifetime partnership with notify. Their goal is to have an entire ecosystem built in that they control QuickBooks enterprise on the cloud, so to speak. That can do everything. So this fishbowl concept or [00:09:00] third party apps, this is a band aid. Now it might be a lot longer with intuitive thinking. Intuit might be thinking 1 or 2 years. I think realistically it might be five years because it takes a long time to understand this niche market. So that's the only thing I wanted to add. Alicia, as someone that's a huge QuickBooks enterprise fan working with inventory type clients, and I welcome the fact that they're bringing fishbowl into the fold, allowing them to influence the future production of what will be QuickBooks enterprise on the cloud at some point. [00:09:30]

Alicia Katz Pollock: Well, I really like that they are recognizing where the software shouldn't do some things internally. It's one of the things that I actually appreciate about QuickBooks, and the whole app ecosystem is that you can really find best fit solutions out there, instead of having the generic one that's inside Qbo all the time.

Hector Garcia: Okay, so Alicia, walk us through what are these improvements they're doing to what they're calling automated [00:10:00] payroll taxes?

Alicia Katz Pollock: Okay, so with your payroll taxes, there's basically two styles that all of the payroll companies use to manage the payroll taxes. Either they just tell you what you're going to owe and they honor the IRS and your state deadlines, or they impound your taxes when you run payroll. And different payroll providers have all done it different ways. And up until now, Intuit's [00:10:30] way was to basically say, well, here's what you owe for your taxes, and here's the date that you are that we're going to pay it. And it was always paid on the last possible day so that you could hang on to your money. But what we were finding, and I know that I find it with my clients too, is, you know, humans are fallible and we get busy and we forget to push the shiny red button or the shiny green button in this case, or [00:11:00] it also means that you constantly have to keep an eye out on your finances to make sure that you've tucked away enough money for that tax deadline. That could be two weeks. It could be a month, it could be a quarter, it could be a year away.

Alicia Katz Pollock: And I even have a YouTube video where I showed how I made a report that shows up all my upcoming tax deadlines, so that I knew at any moment how much I would have to put away [00:11:30] without having to go into the interface and go do all that research. And then that way it just kept a rolling list of how much money I needed to keep in reserves. But the fact that I had to make that report and had to keep tabs on it all the time was, you know, just pulling me away from more important things. So the change that they're making is Intuit is now going to start impounding your taxes at the time they withdraw your payroll. So it [00:12:00] means that you're going to have more money coming out when you run payroll. But it also means that the money was already earmarked for that. So now it's one less thing for you to have to do, and one less deadline for you to miss and a lot less fines for you to incur.

Hector Garcia: So maybe we can walk through like sort of the pros and cons to this. So let's start with the fact that they didn't impound taxes as a quote value [00:12:30] proposition. I'm going to go back in time, maybe five, six years, when Qbo payroll started to get big and people started trusting it. Et cetera. Et cetera. One of the big messaging things and as an ex-banker, Banker I totally bought that message is, hey, we're not going to play with your money, hang out with your money. Make interested in your money while you don't owe it. So we are going to wait until two days before the money is due to allow the two day ACH standard time to pay the government. [00:13:00] And as you said, Alicia, you had to be responsible with your cash flow and make sure the money is in the bank account, um, before they take the money out. And you might have to run special reports to understand what's going to happen. And also, depending on the type of tax, some of the money is due in a week. Some of the money could be due at the end of the month. Some of the money could be due at the end of the quarter. So that was the value proposition message. Hey, with your payroll, you have more control over your tax money because you were not going to [00:13:30] take it away from your bank account.

Hector Garcia: When payroll is do what I'm going to do. I'm going to assume that I don't know this. I haven't been into like the payroll support department, that major payroll debacle. Type of support calls have to do with payments that bounce, right? There wasn't enough money in the bank. And then what happens is there's all sorts of penalties that you get from the government. Plus, I'm pretty sure Qbo will charge you penalty so they can manage the government [00:14:00] penalties. Then you will get the letters about the penalties, and then you have to upload the letters about the penalties. Depending on the version of Qbo payroll you have then into it has to determine whether it was an error from, you know, into it was an error from the user. I am sure that every single time a payment bounce, it's an absolute nightmare. So the nice thing about impounding is that if the payment bounces immediately, you are not liable with the government immediately. You can also you can sort of revert and [00:14:30] not, you know, file the fact that you owe that and then go back and change your payroll and maybe, uh, fast forward it to the next week. You might still get penalties for bouncing the payment, but you don't have to deal with the government. You know, with issues of that, right? Because if you don't have money to pay payroll, you shouldn't pay payroll, right?

Alicia Katz Pollock: You just actually hit on something that I think is a really good benefit of this is that let's say you run a paycheck and have to void it or change it. If [00:15:00] they're impounding your taxes and there's a replacement paycheck changes the taxability. Now, you're not going to have to go back and do the dance of, well, now I have to go change all my tax payments because and they actually this was in the Q&A in the webinar that if there's a change in the tax liability, they'll just adjust the next tax run to accommodate them, either the additional money that they have to pull out or the less money [00:15:30] that they have to pull out. So in a way, it kind of eases out and makes it more possible to adjust historic paychecks. So that's a benefit of this.

Hector Garcia: And yeah, what you're referencing to is similar to when you have a mortgage and you have an escrow account and you and there's an adjustment to the amount of property tax you have to pay or something with the insurance. If there's an overpayment, they kind of keep it in that trust account in that escrow account, and then they adjust it on the next [00:16:00] one. I think that's kind of what you meant, because that's the one thing that could trip people up is, hey, there was an adjustment in a paycheck, and then there's a credit in my favor. How does that work? When they talked about this in the webinar and it's it's kind of it comes with the territory you're not supposed to have in your balance sheet a liability account, because the minute you process payroll, the funds should leave your account. If there's an adjustment to to payroll, [00:16:30] probably they're not going to have this temporary liability account in there that I don't know about that. But the reality is the net benefit to this is that payroll is sort of cash basis from a, from a, from a cash flow perspective. So you never you're never should be seeing any sort of payroll liability that has to do with government taxes. Like if you map of course, you know, health insurance to payroll liability or A 401 (K), uh, matching or that sort of thing.

Hector Garcia: You know, you might have [00:17:00] that in there. But when it comes to like payroll taxes, you shouldn't see a liability, which is actually, in my opinion, the cleanest way to go about managing payroll, which is why I've always favored historically using outside payroll companies like ADP or Paychex or or gusto to have a cleaner sort of payroll cycle. Now, historically, the cons of using a third party payroll provider. But number one [00:17:30] is the integration is just never smooth. It's always a pain in the butt. You know, there's always new items being like new payroll items being created on this third party payroll side, and they're not mapped correctly. So they go into like a random account. And there's always like a weird account that has like a running balance of negative. And you have to figure out how to how to adjust that. So that's always been sort of nightmarish, you know, using a third party, uh, payroll system, you know. Yes. With ADP and Paychex, you can sort of like look at the end month liability reports and make [00:18:00] your journal entries. But I've always liked not having a floating payroll liability account. That would have to always monitor month to month. So I see from a bookkeeping perspective, I see a net benefit of of just having a cleaner workflow.

Hector Garcia: I also see it from just sort of anxiety perspective. I don't have to be anxious about a client not being being able to pay payroll taxes or have to deal with the extra booking of the money bouncing back and forth and penalties and that sort [00:18:30] of thing. So as a bookkeeper, I see that total net benefit to this. I am 100% game for this change. I like the impounding as an ex-banker. You know, I'm always very utilitarian when it comes to like having my money in my bank account for as long as possible, because time value of money dictates that you shouldn't let banks arbitrage your money and make money on your money and and interest rates and that sort of thing. But in reality, for, for for most [00:19:00] small businesses, having a $6,000 payroll liability for an extra week, you know, in your bank account, which is probably going to be your checking account anyway, it's not going to bear any interest. It will probably make zero difference to the whole time value of money calculation. So I'm 100% for this. And Alicia, I think we should talk about, you know, when does this go into effect and for which clients this goes into effect.

Alicia Katz Pollock: Sure. So I'll go through all the nuts and bolts in a second. I just want to reflect on one idea that you gave me, that [00:19:30] it I think that you touched on exactly what people's biggest issue with this is, is that they want to keep their money as long as possible, so that they can earn their own interest off of it. What if it was treated like an escrow account where you actually like, maybe it was in a QuickBooks checking envelope, or maybe Intuit had an account for you that was interest bearing, because I know I get interest on my home mortgage escrow, so there's an idea into it. Hey, maybe think about that. Um, okay, let's [00:20:00] go into the nuts and bolts and everything that they actually talked about in all the details. So it's going to start for all United States payroll customers. So this is not Canada. This is not overseas. It's just us. Um, if you have auto tax turned on starting on ten one. So, um, happening in October, we've got a little bit over a month until it, until it starts. Now notice that the key there is if you have auto taxes [00:20:30] turned on, which I don't recommend ever not having auto taxes turned on, because that's how you get yourself into trouble by missing your tax deadlines. So that is actually making me wonder, Hector, if that, because this is a requirement. This is not a feature that you can opt into. It's going to be on for everybody if you have auto tax. So one question that nobody asked is if you do not have auto tax turned on in your payroll settings, maybe [00:21:00] the impounding doesn't happen. So that's something that we're going to need to check into.

Hector Garcia: So let's go through that really quick. So when you go into the settings button on the gear button on the top right under your company, there should be an option called Payroll Settings.

Alicia Katz Pollock: Yes.

Hector Garcia: Under Payroll Settings, you're going to go down to where it says taxes and forms. And in taxes and forms. You're going to see a little checkbox that says automate taxes and forms if that is checked [00:21:30] on already, then automatically October 1st. Any payroll you do in the future, you're going to be completely opting into this, that we don't know what happens for people that they're on now and that they turn it off before October 1st, or they're off now and they turn it on after October 1st. My assumption is if you turn this on after October 1st, you will you will go into this no matter what. It's just for those people that like from now on, you know, turn it off or on, you know, what's going to happen to them. [00:22:00] That that would be an interesting thing that to to discuss or try to figure out the answers for that wasn't, uh, that wasn't discussed. Now, when you turn that on, they're actually going to walk you through the process on how to go from no other tax to auto tax. And it will most likely push you to the next month or the next quarter just to make sure that it has sort of a clean payroll cycle before you go from no auto tax to auto tax. So just kind of like, [00:22:30] keep that in mind. It's also worth mentioning that when you go into payroll now, you're going to get a pop up that says important change to automated taxes. What's changing? And they say starting September 30th we can do up to October 1st to we'll withdraw your payroll taxes when payroll is processed. This includes food taxes like federal unemployment taxes. It doesn't mention in the pop up if it does include state [00:23:00] taxes.

Hector Garcia: And the reason why this matters is because there are still some states in which Qbo cannot pay the payroll taxes. For whatever reason, the states do not have that linkage and you still have to make those manually. So I'm making the assumption this is why the pop up doesn't specifically mention state taxes. I know like most of the states, it can make the digital payments. So I assume that specifically for those that have those weird states that can't accept the digital payment, Those will still have to manage that [00:23:30] separately. And then it says how can this help your cash flow. So basically it says you know the money goes out. It's funny because like taking money before is owed doesn't technically help your cash flow. It helps you is the illusion of helping you manage cash flow more responsibly. But it doesn't technically help your cash flow. So it's a funny choice of words there. And then it's asking you, what are my options? And it says if it's already on, there's nothing you can, there's nothing you can do or nothing you [00:24:00] can change. You will be automatically opted into this. And it says to stop using auto taxes, turn off automatic taxes and forms. Again, it's not 100% sure what happens after October 1st if people will will be able to opt out of this. So so all we know is that if you are opted in into auto taxes today and October 1st passes, you will go into impounding. Rebounding not 100%. Sure, once you go into impounding, if you can [00:24:30] opt out somehow. Was that was that mentioned Alicia in the in the webinar?

Alicia Katz Pollock: Not specifically. No. But you know what? What I don't want people to take away from this is, oh, I don't want impounding. Let me turn off my auto taxes, because I guarantee you're just setting yourself up for a headache later on when you miss a deadline or you pay the wrong amount manually. And so I'm still a believer in this, that the a little bit of interest that you're going to make is not worth the, the potential [00:25:00] downfalls.

Hector Garcia: And it's also.

Hector Garcia: Worth mentioning that if you don't have auto taxes turned on, Intuit will probably wash their hands with any sort of liability of late filings, late payments. You have to have auto taxes turned on to shift some of that responsibility and liability over to Intuit.

Alicia Katz Pollock: Exactly, yes. Okay. The next thing that they mentioned is that if you are running auto payroll and auto tax, The difference is auto tax, as we said, is Intuit automatically paying [00:25:30] your taxes for you? Auto payroll is the fact that if you have if your payroll is the same month after month after month, like everybody's on salary, for example, there's a setting that it will just repeat the previous payroll run indefinitely until you change it again. And that's called auto payroll. So if you are running auto payroll and auto tax, there's going to be an extra step where you're going. They're going to ask you for consent and you need to provide it by [00:26:00] October 1st. And what you'll see is a notification in the payroll overview center. So always make sure that you're looking in your payroll overview to make sure that all of your taxes running as expected. So if you are auto payroll auto tax, they're making sure that you know about this change by requiring you to provide consent. So I think that's really smart because otherwise they'll turn this on and you'll have no idea that there's been a change happening if you're completely automated.

Hector Garcia: I love auto [00:26:30] payroll for companies where all the employees are just a fixed salary. I love that because it's like, set it and forget it. And it's particularly useful for those people that have s corporations that don't really have a need to have payroll, other than they need to have reasonable compensation in their salary to keep the S corporations. And as accounting professional, you recommended that they pay themselves, whatever $60,000 a year. So you're just basically setting up, you know, your your payroll taxes [00:27:00] and your salary of $5,000 a month. Set it and forget it. You know, make sure you, you, you convince that business owner that, hey, every single month you're going to be paying $5,800 out of your bank. That's going to be your payroll, the taxes, and that's going to hit your, you know, your bank account, you know, minus all the taxes that we decided to withhold as you as a way to sort of tax plan for the future. So I particularly like the auto payroll [00:27:30] because of that. And of course, you know, the the auto tax and the tax impounding comes with the territory. So for a lot of our clients are S Corp's and they don't have employees, but the owner is the employee out of out of payroll is amazing.

Alicia Katz Pollock: Yeah. Absolutely is. Okay. The next thing is that where are you going to see the evidence of all of this happening. So it's going to be in two different places. So one is that when you run payroll, it's going to be right smack dab on the screen on this [00:28:00] date. We're going to take this much on this date. We're going to take this much. So it is completely transparent. You can see it right on the payroll run. So you can note those dates to yourself so that you know that it's going to be happening. And also in the payroll tax center itself, there's actually a money bar that's going to that that's going to show up. And when I say money bar, you know how like in the customer and vendor centers, you have those colors across the top. It's going to tell you the status of those payments [00:28:30] right inside the payroll, uh, payroll tax center section. So that hasn't rolled out yet. We don't see any evidence of it yet, but we know that that's coming. So they're going to make every effort to make sure that you know what's happening behind the scenes. They're also going to send out notification emails. And those are going to go to the primary admin. So whoever is the primary admin on the account is going to get them. I'm also kind of assuming that it's going to go to the accountant users as well, because I get [00:29:00] all kinds of payroll notifications for I, you know, I have dozens of clients where I don't touch their payroll, but I'm getting all their payroll notifications because I'm the accountant user on the file. So I imagine that it's going to go to the accountant user as well as the primary administrator.

Hector Garcia: And I would say that's that's it for what they have announced, particularly when it comes to payroll. Alicia, maybe we can discuss, you know, kind of our thoughts behind this. I'm going to start with assuming that [00:29:30] somebody from Intuit is listening and sometimes taking our advice. I would love to see the option, the flexibility to take the money out of the bank account, either separate the net paycheck amounts and then the lump sum of the taxes as two separate pieces of amounts, or as a lump sum. And the reason why I like the lump sum, and this is particularly why sometimes we choose to outsource [00:30:00] the payroll instead of using QuickBooks Online Payroll is because there are people inside organizations that have access to the banks, but we do not want them to try to triangulate the the, the amounts that are coming out of the bank to try to figure out how much everybody gets paid. So if you lump sum everything into like one chunk, like $7,800 came out of the bank account for payroll. It's going to be much harder for the employee if there's 4 or 5 employees to know who's getting paid what.

Hector Garcia: Now, I find [00:30:30] it that, um, that whenever you split up the payments, like these are the taxes and these are the net amounts, and this is this. When you split them out like that, you make it a lot easier for the employees to see, especially if every net paycheck comes out of the bank account. So, like, if every single net paycheck comes out, even if the if if the the person's name is not showing, you can figure it out. Like if there's three employees, you know, there's the owner who gets paid the most, you know, who is the manager and then you know you so that you'll know exactly how much everybody is [00:31:00] getting paid. So I would love to see the option to just take the whole chunk of money as one lump sum. And again, I know some people are going to prefer to see the tax impounding separate than the net paychecks, because maybe they want to reconcile them in with some other workflow. So do you have any thoughts about that, Alicia.

Alicia Katz Pollock: Yeah, I mean With paychecks. For example, when my clients are using paychecks instead of Qbo payroll. What we see inside the QuickBooks are three transactions every single [00:31:30] month, and you can see in the bank detail which one is the wages, which one is taxes, and which one is the fees. And we actually just make bank rules for all three of them and put them down to payroll expenses, even though it's not 100% accurate, because that tax is part salary and part company, it's part employee and part employer. But at least you know how much went to taxes. And then when you need more detail than that, my clients just log into paychecks and they can go see everything happening [00:32:00] behind the scenes. And in some ways, especially because of what you just said, I appreciate that. And in some ways I prefer it because you don't have the transparency. You can't have somebody rooting around looking for salary information, and you don't have the two sets of data redundantly, because I also have some clients using third party payroll who then mimic and mirror all of the settings that are in the payroll software, and then they're maintaining the [00:32:30] data in two different places. And I think that's a whole lot of unnecessary work. But what you're saying about it in QuickBooks online, being able to have the user permissions that maybe the user permissions don't give the person the ability to see payroll, which also hides names on the checks. And as long as you don't have that name in the memo, there's they can't really figure out whose is whose. But in your case that you just described [00:33:00] where you only have three people, it might be possible for somebody to go in and find that information.

Hector Garcia: Right? In my case, I wasn't just talking about people having access to, uh, the QuickBooks stuff. I'm saying, like somebody actually having the physical bank statement because sometimes you have a bookkeeper that their job is to reconcile like an internal bookkeeper. Their job is to reconcile the bank accounts. But I don't want them to see payroll details. So that's that's what I meant by that. And since we're still in suggestion mode into it, one thing I would recommend you do take [00:33:30] a look at how ADP shows those reports, how paycheck shows those reports, how gusto shows those reports and build reports that can summarize that lump sum of money coming out. And so any bookkeeper or any accountant or whatever can break down that payment and see, okay, these are wages, these are, you know, x, y, z liability. These are payroll and there's no fees per se, because I believe the fees, the payroll fees are always going to be sort of a separate charge that gets lump sum into your monthly [00:34:00] QuickBooks online fee anyway. So like that the fee part is a little bit different. But again, I would love to see just one lump sum of money coming out for payroll and then one accompanying report that explains what those details are.

Hector Garcia: Yeah, that's.

Alicia Katz Pollock: A really interesting idea and a really interesting point for sure.

Hector Garcia: Now, one thing I wanted to discuss before we wrap up the episode is one of the simple advantages that we could use to frame up the value of QuickBooks [00:34:30] payroll was the fact that they didn't impound your money. So now that we're going to impounding, and probably the long term, my speculation is that QuickBooks wants to move this permanently like QuickBooks traditionally has shown us that what they don't really want to give people choices. The choices kind of happen during the transition. Like with the new reports, you got the classic view and the new modernized reports. That choice is only temporary. I think this is obviously [00:35:00] I feel this will be the long term strategy, as QuickBooks payroll will be 100% impounded. So now that that piece of sort of separator is not there, maybe Alicia, we could talk about what are some pros and cons of using Qbo payroll. So I'm going to start with simple pros. The most simple pro is that if you have QuickBooks Online Plus or QuickBooks Online Advanced and you enter a timesheet before running payroll, and in that timesheet [00:35:30] you have customer job information. When you run that payroll internally in your PNL by customer job, you're actually going to see the expenses of the payroll, wages and taxes be split or distributed or allocated to each of the customer jobs.

Hector Garcia: I would say that that becomes the single biggest differentiator. The second one is [00:36:00] is pretty obvious. Just having it all in one place, just like not having to go to a different portal to, you know, to ADP comm or whatever, go out there and load the timesheet information like you're using one ecosystem to to do your bookkeeping and your payroll. And if you're using Qbo. Uh qbo. Payroll Premium or Elite, that comes with QuickBooks time, aka previously known as Tsheets. You can also use your your Phone [00:36:30] app, your your mobile app to do the time tracking, the the geolocation tracking and translate that into a timesheet inside Qbo that goes straight into payroll. So keeping everybody inside one ecosystem, it's a huge advantage. And what Intuit is investing a lot in is in this thing that they're calling. I think it's called it workforce. What's it called? Workforce management or human capital management or whatever. Their boss word is where they're going to put a lot of money [00:37:00] in the back end systems. So when employees log in to workforce to look at their pay stubs, to look at their paychecks, So at some point, maybe possibly looking at their time sheets and going through an approval process in the time sheets, or maybe looking at the historical benefits, it's just making the small businesses feel that they have a really strong, big business platform where the employees feel that they're working in this very robust company because [00:37:30] employees are going to perceive the strength of their employers, mostly through their payroll.

Hector Garcia: Like, do I get paid in time? Is it easy to see my my, my my pay stubs? Is it easy to see the progression of my races over time? Am I getting benefits? Do I understand what my benefits are? The biggest sticking point to keep your employees to retain your talent is having a really strong back end to for they to [00:38:00] interact with their employer with their pay. So I think this huge investment into workforce is going to not just do that, but also it's a huge opportunity for Intuit because we know Intuit is going to cross-sell everything to everyone. When the employees are in workforce, they're going to push Credit Karma, they're going to push loans, they're going to push, uh, you know, uh TurboTax or whatever, which I'm not a fan of that. But as a company, obviously they're going to benefit deeply in keeping more people inside QuickBooks for [00:38:30] their payroll ecosystem. Yeah. Any thoughts about pros and cons?

Alicia Katz Pollock: Yeah. Well, let me actually just touch on the workforce app because if you haven't checked it recently, it's really, really come a long way. Your employees can use it to self-serve if they have life changes like they move or they have kids or they want to change their W-4 forms, they can do it right inside the app so that they don't even have to talk to HR and fill in forms. It's all right there. When you run payroll, they see their pay stubs when at the end of the year, that's where their W-2 [00:39:00] forms are. So all of it is all in one place. They can request leave from there. It's now the app for QuickBooks. Time doesn't have a separate app anymore. It's now inside workforce, so your employees are literally going into the app to check in and check out every day. So it's really become robust. And one of the things that I hear a lot from people is, uh oh, I would never put people on Qbo payroll. It's not powerful [00:39:30] enough, but I that's the same symptom of the same argument that you hear me make all the time about Intuit rolling out features and then evolving them. And payroll has now been out for, oh, God, almost ten years. And it's really changed and it's really come a long way. And at this point, I put almost everybody in Qbo payroll, unless they have certified payroll [00:40:00] or unless they have a they have to do multiple classes per employee. That's still the one big limitation, but they are actively working on that.

Alicia Katz Pollock: And I have heard from somebody recently that that's coming this fall. And so if you have not checked out Qbo payroll recently, it's worth a separate a second look. I actually have a two hour class on Qbo payroll. I have a one hour class on QuickBooks time. I have a class on, [00:40:30] um, the project center, because the project center leans on Qbo payroll, as Hector said earlier, so heavily that it just makes it a joy to be able to do your job costing on your projects. So, you know, I know in some ways I'm a fangirl. But on the other hand, qbo payrolls, most of their limitations are gone, and so it's always worth A if you're using ADP, gusto, paychecks, or one of the other ones, it's worth checking and seeing if what you're doing there is now available in [00:41:00] Qbo payroll. I mean, I've had people say, well, it doesn't do S Corp owners health insurance. Well it does. It's a pay type. Every all of it comes down to setting it up right, knowing where the features are and making sure that you're using it properly. But once you come through all of the settings, keeping in mind that the settings are in two different places, some of them are under the employees and some of them are up under the gear and payroll settings. But if you know that both are there and you comb through [00:41:30] everything it does everything that you would need to do for most payroll situations.

Hector Garcia: Now, Alicia, to allude a little bit about, uh, the limitations of it. So I do agree that the class tracking stuff, I, I do agree that class tracking stuff, it's a little bit limited. There are some options that maybe we'll walk through those options really quick because this is like an area that is just so hidden inside the payroll settings that most people don't don't know it's there. So we'll talk about that. But I [00:42:00] think that that with Intuit should really focus on is making this payroll job costing allocation a little bit deeper. Like right now it only allocates payroll taxes. It won't allocate worker's comp. It won't allocate uh benefits. So like that's really important. Especially if they want to hit this construction. Uh, and uh contractor base type of industries. There isn't a lot of flexibility on the, on location, [00:42:30] like how to, you know, uh, split a paycheck across multiple locations. You can't do that. And particularly with the class settings, if you actually click on the gear menu and go into payroll settings, you have to scroll all the way down to where it says accounting and click on the little pencil to edit icon. And then you're going to see your chart of accounts and payroll sort of item tracking. But somewhere sort of built in here there's a little option that says class tracking. [00:43:00] And when you click on edit, it's going to give you three options.

Hector Garcia: One says I don't use classes for payroll transaction. The other one says I use the same class for all employees. And the third one says I use different classes for different employees. So in that third one you can say, look, employee A uses class. You know, California employee B uses Class Florida or whatever. And then you click on save. The key element to this and this is where the most confusion is. And [00:43:30] I've had to go down the rabbit hole and test this in many ways is that once you set up the the class tracking per employee, there's no way for you to split a particular paycheck across multiple classes. And that's the key issue for me is that it's only one class per employee. And I don't like that because when you do timesheets, you have the ability to select a class in a timesheet, okay. And it gives [00:44:00] the user the illusion that I'm tracking payroll by class because I put it on the timesheet, and the reality is that it doesn't work that way. So that's something that Qbo has either broken in the process, not understood how it works, not clarified for users. The only thing you can do is come in here and do one class for all employees, or one class per employee. And the same thing happens with with location. You can only assign one paycheck to one location and that's [00:44:30] it.

Hector Garcia: Right.

Alicia Katz Pollock: Now, one of the things that's interesting, but a little confusing about Qbo is that there are two different ways of analyzing all of this data, and one of them is through the timesheet reports and the project center. The project center is all based on the timesheets. And so if you are assigning classes to the jobs and each timesheet entry, there are ways of getting that information. It's just not in your payroll allocation. And so [00:45:00] you do the same thing that all accountants have been doing for millennia, which is that big fat journal entry that just redistributes the payroll across classes for reporting. So we haven't done away with that yet, but it's not new. It's that workaround has been there since, you know, 30 years. So we just haven't evolved past it yet.

Hector Garcia: Yeah. But I'm gonna either. Yeah but or yes. And I'm not sure what the answer is. Quickbooks enhanced QuickBooks Desktop [00:45:30] Enhanced Payroll has been doing this for years, and this is the major complaint that old school accountants have that have been using QuickBooks desktop for construction clients. That's saying, hey, you're forcing me to go to Qbo payroll, but you're not giving me that feature. How in the world do you want me to embrace Qbo payroll where I can't split my classes? I can't allocate my all my other payroll benefits to the jobs and like you said, oh, it's [00:46:00] there on the project screen. It's there on timesheet reports. Yeah, but you know where we want it. We want it on a PNL, a PNL by class, a PNL by job. And that's where we want it, because otherwise we're going to spend hours and hours and hours doing this crazy, um, journal entries to allocate this stuff. So that's kind of the key element here, that, yes, the workaround has existed for years, but QuickBooks desktop gave it to me. So why would you spoil me for 25 years [00:46:30] with QuickBooks desktop doing it in one click? And now tell me, don't worry about it. There's a bunch of options that you have or workarounds. I just don't see it and I don't get it. Why they haven't invested the the resources into this.

Hector Garcia: Well they do.

Alicia Katz Pollock: I'm going to let me just interrupt you on this, because I know for a fact that this is a hot topic at Intuit, and I talked to the developers on it, and it's actually I'm going to put imminent in quotes, but the the release [00:47:00] of this ability is in the foreseeable future. So I'm going to say, you know, I heard within a couple months, but I'll give it a year. But I know that this is being solved.

Hector Garcia: Alicia, I believe your heart is in the right place, but I was in the Intuit Council from 2016 to 2018, and I heard that exact message in 2016. So I know that in 2024, we're probably much [00:47:30] closer to where we were in 2016. But I do not ever, ever, ever take somebody into it saying it's going to be in the foreseeable future because I just do not have the history with them to tell you that I believe that. I believe that they want to be there. Aspirationally Intuit is incredible. They aspire to fixing things very quickly. I'm just like, I wouldn't just say, you know what? I'm gonna. I'm just gonna prep my client to convert to Qbo payroll in January 2025, [00:48:00] because that's what foreseeable future means to me. So until I see it, I am not going to advertise that it'll be coming soon. Okay.

Alicia Katz Pollock: So I will go hit up my my rep and find out what the reality check is on this. And then I also want to point out that that Hector is a noun, not a verb. So if you're going to hector them, make sure you're doing it with a smile.

Hector Garcia: True.

Hector Garcia: So that's it. So that's August updates mainly [00:48:30] to Qbo payroll impounding. Alicia and I both approve of this. We love it. Uh, obviously there's discussed here a couple of ideas that we think will even make this even better. And with that being said, Alicia, what's going on in your world?

Alicia Katz Pollock: Well, I am gearing up to start classes again for the fall, and I'm starting on September 10th with QuickBooks ledger, which is a brand new course for me. And so I'm adding QuickBooks ledger to the Royal Wise [00:49:00] Library so you can join me live on September 10th. Or you can watch the course after the fact. And then a couple weeks later, I'm revamping my QuickBooks Online advanced class, which I haven't taught now for a couple years, and the last time I taught it, I could break down all the differences between advanced and the other versions in an hour, and it's going to be a two hour and maybe a three hour class if I go into full demo mode. So that's what is happening for me in September. So if you're interested in [00:49:30] QuickBooks ledger and QuickBooks advanced, come check us out at Royal wise.com. And Hector, how are you doing? What are you up to.

Hector Garcia: So I recently got an email from Intuit Connect and I'm sorry to say it like that because I know you haven't gotten the same email, but hopefully you'll get it soon. Uh, that one of my classes was accepted, so I'll be teaching QuickBooks Online Advanced Reports, which had been a class that sort of been assigned to me [00:50:00] from, like I say, the last 3 or 4 QuickBooks connects, and Alicia took over that class for me, I believe in 2022 when I went into my voice, my vocal cord surgery, and she did a fantastic job at that. But it seems like Intuit wants to give ownership, quote unquote, of that class back to me. So I'm hoping, Alicia, that the class that you've been doing great at teaching, which is the bank feeds class or the qbo tips and tricks, something that eventually goes your way. So we're very excited [00:50:30] to wait until you get the email saying that you will teach that class. In either case, I think you're going no matter what.

Alicia Katz Pollock: I'll definitely be there.

Hector Garcia: Yeah, yeah, yeah. So that's that's October 28th to the 30th in Las Vegas and go into I think it's just go to QuickBooks connect and it'll redirect to I believe it's Intuit. Com forward slash into a connect. Doesn't look like they have open tickets to the public. You go in there and you sort of apply and you join the the [00:51:00] waiting list, and then maybe they contact you or not. I find that to be an interesting approach because Alicia, as you know, and I've been talking about this for, for a long time, I have a conference to and like I, I'm not snobby enough to say, you got to go in a waiting list and we're going to underwrite you to see whether or not you can come to our conference. Now, I'll be devil's advocate here. Intuit is making some major changes. They have been, for the lack of a better term, making a lot of accountants mad, you know, with the changes [00:51:30] that they're making, uh, there's a generational shift. You know, there's sort of like the old school accountants that are going to retire soon and into it doesn't really care about them very much. They're focused on the newer cloud based, sort of like, uh, intuit, uh, loving people that don't have that history of QuickBooks desktop now being as good that not being as as QuickBooks Live being much better than QuickBooks online.

Hector Garcia: Et cetera, et cetera, et cetera. So I could totally understand why Intuit wants to maybe just bring the people [00:52:00] in that are mostly going to benefit from the conference and vice versa. Let's let's call it that. And or and also crowd control, because one of the challenges that they've had every year is that they sell out and people get mad. People say, oh, I didn't get the email. And I mean, that's BS because they they do a pretty big deal, uh, marketing these things. So I think that they kind of want to balance crowd control, uh, making sure that the people that are mostly going to add value to the conference because they're cloud centric [00:52:30] type of folks are there. And the ones that it just sort of like, I think they want to enhance the experience. But again, I, you know, I think a lot of people will be skeptical in terms of why are they going through a waiting list and that sort of thing. Do you have any opinion on on that or.

Hector Garcia: Well, I.

Alicia Katz Pollock: Hadn't thought about it in some of the terms that you just said. And one of the things that it's making me think, and this is pure speculation, I'm just making this up. But the we've had the fairly [00:53:00] same consistent population over the last six years. And at first it was the migration from desktop to online. But we also now know that, you know, we've talked a lot about the pipeline and bringing younger people into the into the fold. And, you know, I'm just making this up. I don't know if it's realistic, but I think it would be really interesting. On Intuit's perspective to try and find the the newer accountants [00:53:30] and the people coming who are in the in the school programs now and bring in a younger generation who's brand new to the whole entire platform, and that strategically could be good for them. Now I have zero idea if that has anything to do with what's going on, but it just.

Hector Garcia: Made me think about just speculating. Yeah, right.

Hector Garcia: And I wonder if that would also play in in the speaker selection. Like will they, will they also kind of take the same approach to to speaker selection to main stage speaker. [00:54:00] I mean, look, Ryan Reynolds last year, I mean if there's something if there's a person that's super far away, you know, from accounting is, you know, Deadpool, right? I mean, it's just like, you know, what does he have to do with it? But obviously, you know, like my wife went last year mostly to see Ryan Reynolds. So obviously what ends up happening is, um, you know, with the speaker selection, with the main stage selector, you might get a whole new crowd or generation. And in many ways, [00:54:30] that part is good, because sometimes diversity of thought can give intuit a new point of view, because if the same people go every year and they give the same exact advice, or they're frustrated about their advice not being heard. It might not help into a move forward. Now I could totally be on the camp of hey, if we give you this advice five years ago and we still give it to you, maybe you should listen to it. That's a whole nother conversation. But I think that Intuit is it's managing these [00:55:00] two dichotomies, right? Like, you know, some of the old school people are giving us the same advice, but we're sort of tired of it. And and we want to know what the entrepreneurs of the future are expecting, because if we want to build a tool that's going to be for everybody, we might need to see what a 25 year old entrepreneur thinks. You know, Qbo should look like and MailChimp should look like and all the Intuit ecosystem stuff. So in either case, if you can get tickets, go to Intuit Connect. Um, it used to be called QuickBooks connect. Now it's called Intuit Connect. [00:55:30] Alicia and I will both be there, and it's going to be a lot of fun. It always is. A lot of fun. And, Alicia, I'll give you the last word.

Alicia Katz Pollock: See you in the next one.

Hector Garcia: See you on the next one.