How Do I Handle Job Costing with Outsourced Payroll? (ESC Accounting Only)


In ESC, labor always hits the General Ledger and Job Reports from the Payroll module.  So if you outsource your payroll, there is an easy way to get labor costs posted to your jobs and maybe even save some time compiling information for your payroll company.


Employees are set up with the appropriate wage items, pay rates and direct deposit. By using wage items going to the correct accounts, the gross pay will be allocated correctly, and by setting up direct deposit for each employee no checks need be printed.

Once everyone is setup correctly, all that is left to do is enter time (or post from dispatch), process payroll and do a journal entry from the statement sent from your payroll provider.


Payroll Clearing Account

Go to Company → Enter Chart of Accounts and set up a "Payroll Clearing" account as shown below. You can use any account number or description you wish, just make sure the Category is Cash.

System Setup

Go to Company → System Setup → System Accounts and enter the account number just created in the Payroll Checking Account field.

Wage Items

Go to Employee → Wage Items → Add New.  Add any wage items you will need. For example:

  • Regular Pay
  • Overtime Pay
  • Salary
  • Holiday Pay - Hourly
  • Vacation Pay - Hourly
  • Sick Pay - Hourly
  • Holiday Pay - Salary
  • Vacation Pay - Salary
  • Sick Pay - Salary
  • Spiff
  • Commission

If you have multiple COGS labor accounts, you will need a separate wage item for each labor account. Each wage item can only post to one expense or COGS account.

  • Name: Enter the name of the wage item you will see in employee setup screen and on the pay stub.
  • Type: Choose from:
    • Hourly – rate paid per hour.
    • Annual Salary – this amount is divided by the number of pay periods per year. This requires at least 1 hour be entered on time sheet for a check to be processed. If you want Vacation, Sick, Holiday, etc., to go to different GL account numbers set each up as a separate salary wage item.
    • Flat – This can be used for a set amount per pay period. No time or time sheet is required, but any flat check being processed will show up on the preliminary report. Every time checks are processed for that particular employee’s pay period (weekly, bi-weekly, semi-monthly, monthly or yearly) a check will be generated. Because of this, vacation, holiday, sick, etc cannot be handled like the salary wage items. We do not recommend this for a pay type, only more for special union requirements or other special scenarios.  Time cannot be entered on a time sheet with a flat pay type. If time is entered for a person with a Flat pay type as a default with another pay type that amount will be added to the flat amount.
    • Commission – Used to pay commissions.
    • Bonus – Used to pay bonuses.
  • Category: Is only active for Hourly or Annual types.
    • Hourly – Choose from Regular, Overtime, Sick or Vacation.
    • Annual - Choose from Regular, Sick or Vacation.
  • Expense Account: Account for the gross pay to post to.
  • Active: Default is active. To make the wage item inactive remove the check.


Go to Employees → Enter Employees and double-click on an employee to edit their profile.  Click on the Payroll tab.

  • Pay period: Choose from Weekly, Bi-weekly, Semi-monthly, Monthly or Yearly. When running payroll you can select which checks to generate according to this setting.
  • Wage item: Enter all wage items currently pertaining to this employee. All wage items previously set up will appear in the drop-down list. Additional wage items can be added later. 
  • Rate: Enter this employee’s pay rate for this wage item. If a person is salary enter the yearly salary and all rates for any salary item need to be the same. When entering time in time entry or on a time sheet to break out vacation or job costing, the software will do the necessary calculations to make the gross pay correct while allocating the correct amount to the GL account associated to the pay item.
  • Default: Check the pay item that will be the most often used for this employee. This wage item will automatically populate the Wage Item field on the time sheet, but can be changed while entering time.

Now, click on the Direct Deposit tab.

  • Name in Deposit – Enter the employee’s name
  • Direct deposit active for this employee – Check the box
  • Active – Check the box
  • Bank account type – Checking
  • Routing number / Bank account number – Enter 123 in both boxes
  • Allocate – Balance
  • Amount – Leave at 0.00

Click OK to save the settings and exit the screen.

Processing Payroll

Now you'll post time from the dispatches (Dispatch → Post Time to Payroll).

Or enter hours directly onto time sheets with a Job Number and Job Class.

For non-job time, you can enter a lump sum on a single day. For example, for office personnel, you could enter 40 in the first day of the week.

Now head to Employees → Process Payroll Checks and select Generate Checks.

The following information will be displayed:

At this point, the gross pay has been entered in your Payroll Clearing account and all job costing has been completed.

Statement from Payroll Company 

Each week the payroll company will send you a breakdown of the payroll showing gross wages, deductions, taxes and their fees. The statement is used to create a journal entry to enter the rest of the desired/needed information into the payroll clearing register and the general ledger. When the first journal entry is created, it can be memorized to make entry easier for subsequent payrolls. Since each payroll company formats their statements differently and each of our customers do things differently, it is difficult to give step-by-step instructions at this point. If you need assistance processing your first journal entry, please contact our support team.

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