Lesson 45-- Payroll Setup
Goldenseal payroll software includes a full-featured payroll system that handles all types of deductions, withholdings, insurance and taxes.
Payroll integrates with the other parts of the Goldenseal accounting software-- the information that you enter for payroll is also used to calculate job costs and time and materials billing.
Since payroll can be very complex, this manual will cover it in two separate lessons. This lesson shows you how to set up payroll for your local conditions, and the next shows you how to run payroll on a weekly basis.
Before you begin to use payroll, you need to set up the following lists:
You also need to set up two types of accounts:
This lesson will cover each of these items.
Use benefit items for medical coverage, pensions, retirement contributions and other employee benefits. Benefits can be employee deductions, employer expenses, or payments made directly to employees.
To create a new Benefit Item, follow these steps:
Use benefit packages to assign specific benefits to each employee.
To see the items included in a Benefit Package, follow these steps:
To assign benefits to an employee, follow these steps:
If an employee receives different benefits for different types of work, follow these steps:
If you pay a sales commission to employees, enter one or more Commissions-- they are similar to wage schedules.
To enter a commission, follow these steps:
To assign a commission to an employee, enter it into the Commission field in the employee account record.
To assign a commission for sales in a sales branch, follow these steps:
Use Labor Billing Rates to calculate the amount you charge for time and material billing of labor, or labor job costs.
To create a labor billing rate, follow these steps:
When you set up labor billing rates, you can use several different calculation methods:
Create a tax item for each item that you withhold from employee payroll, and for each employer tax or insurance that is based on payroll.
HINT: Goldenseal already includes the correct setup for US and Canadian federal taxes, and taxes for all states and provinces (see page 161). You'll only need to modify tax items or tax tables if the withholding rate changes, or if you want to add additional withholding for items such as union dues.
To create a tax item, follow these steps:
HINT: Check the Reference manual for more about Tax Items.
Goldenseal automatically computes year to date figures for each deduction, and stops deducting those items that cut off at a certain amount.
Tax tables compute federal, state and provincial tax withholding. They usually use a 'step table' with different rates for different wage amounts. Tax Tables are always based on the formula method for computing taxes (not the multiple-page 'lookup tables' used for manual computation).
HINT: You'll probably never need to create a new tax table.
To update a tax table from a state tax booklet, follow these steps:
Use Tax Packages to assign specific taxes to each employee.
Some states require multiple tax packages as a way to assign taxes for each marital status.
You may also need to use more than one tax package if different employees have different withholding items-- for example, if only some employees pay union dues, if some get EIC payments, or if you have employees that live in different states.
To see the tax items that are included in a tax package, follow these steps:
Worker's Comp insurance and Disability insurance sometimes use different rates for the same employee when they do different types of work. For example, in some states the worker's compensation rate is more expensive when an employee does work that is considered more dangerous.
To set the rates for each type of work, follow these steps:
Use vacation items for vacations and holidays. To create a new vacation item, follow these steps:
Use Vacation Packages to assign specific vacations and holidays to each employee. To see the items in a vacation package, follow these steps:
Wage schedules are used to set the pay period, payday, and other basic payment information.
HINT: If you use the same pay period for all employees, you can use just one wage schedule (even if they each have a different wage rate).
To create a new wage schedule, follow these steps:
HINT: If you use different pay periods, you may want the name to describe the pay period-- for example, 'monthly salary' or 'hourly paid weekly'.
Pay Period and Paydays
Choose the interval to use for pay periods-- you can select weekly, biweekly, monthly, or some other payment interval.
Also choose the way to calculate paydays. Payday can be on a fixed weekday (either one week or two weeks after the close of the pay period), or it can be a fixed number of days before or after the close of the pay period.
Enter a Base Period date-- the start date for any pay period.
Goldenseal will then calculate all pay periods and paydays for the current year, and display them in the table at right.
Wage Rate Amounts
Goldenseal gives you two ways to handle the wage rate amount in each wage schedule-- you can use a variable rate (different for each employee), or a fixed rate (the same for everyone).
To use a variable rate, turn on the Use Variable Rate checkbox. Each employee will receive a different wage rate. Enter the wage rate amount into the Wage Amount field in the Employee account.
HINT: Turn the checkbox on if you pay employees with the same pay periods and overtime rates, but use different wage rates.
To use a fixed rate, turn the checkbox off, and enter the wage rate amount into the Rate field. Goldenseal will pay all employees that use this wage schedule at exactly the same rate.
HINT: Turn the checkbox off if you have standard wage schedules that are the same for all employees.
If the company owner is paid via regular draw checks, create a Wage Schedule for the owner, and enter the wage type that best describes the payments. Use Owner Hourly for payments per hour worked, Owner Salary for regular amounts, and Owner Draw for irregular amounts.
If some employees are paid a regular amount each period no matter how many hours they work, create a Wage Schedule for them and enter Salary as the wage type.
Wage-Based Benefits and Taxes
If each employee receives the same benefits and pays the same taxes for all the work they do, turn on the checkboxes for Use Employee Benefit Package and Use Employee Tax Package. In that case, Goldenseal will use the information that you entered into the employee account.
If employees receive different benefits or pay different taxes for different types of work, turn off those checkboxes, and enter a benefit package or tax package into each wage schedule. That way you can control the rates that are used for each item of work, when you enter labor hours.
Assigning Wage Schedules to Employees
To assign a wage schedule to an employee, follow these steps:
HINT: You can assign only one variable rate to each employee. If you pay more than one wage rate to an employee, you will need to create more than one Wage Schedule for them, and turn off the Variable Wage Rate option for all but one of them.
Other Cost Accounts
Create other cost accounts for each tax or insurance agency that collects taxes or withholding. If you pay more than one tax to the same agency, you only need one account. For more about other cost accounts, see page 228.
In this lesson you have learned how to set up for payroll. It's complicated!
Maybe you'd be better off to just fire all your employees. Nobody would steal your pencils then, and you could take a nap or eat chocolate any time of day without being disturbed.
Speaking of chocolate, our manual-writing staff is definitely addicted. Have you ever thought about sending them some?