Processing PAYROLL Transactions

1. Processing PAYROLL Transactions Slideshow 7B

2. Contents • Entering PAYROLL Transactions • Employee Timesheets • The Payroll Cheque Run • Cheque Details • The Payroll Cheque • Payroll Run Journal Entry • Processing a Single Paycheque • Remitting Payroll Source Deductions • Processing Vacation Pay • Recording Accrued Wages • Processing T4 Slips • PAYROLL Reports

3. Entering PAYROLL Transactions Once the PAYROLL module is set to READY, you can start processing your company payroll. Session Date Setting the Session Date in the PAYROLL module is different from the other modules. The PAYROLL module will use the Session Date as the processing date regardless of the Period Ending date you enter. Payroll Tax Tables Sage 50 Accounting includes payroll tax tables which is issued by the Canada Revenue Agency when processing payroll transactions. A business will receive payroll updates with the Sage 50 Accounting for a fee. The Sage 50 Accounting payroll module uses the Session Date to determine which tax table to use. See http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/whtsnw-eng.html Click to continue.

4. Employee Time Sheets Companies have their own way of keeping track of employees’ work data. A common way is through timesheets. Study the timesheet at the right.This employee is paid on an hourly basis. According to her Time Sheet, she had worked 80 regular hours and 2 hours overtime. Click. According to her Payroll Ledger, she is paid $20 for each regular hour she works, to a maximum of 80 hours and $30 per hour for overtime. Click. The deductions are based on the information on the Deductions Page of her Payroll Ledger. Click Loan Repaid is what the employee wishes to pay for her cash advance. When an employee has a cash advance owing, a pop-up reminder appears such as that shown at the right. Click to continue.

5. The PAYROLL Cheque Run Processing PAYROLL with Sage 50 Accounting is done using the Payroll Cheque Run. Click the Payroll Cheque Run icon below.

6.  This is called the Payroll Run Status Bar. It allows you to refine your employee selection that should be paid. The PAYROLL Cheque Run Sage 50 Accounting automatically prepares a payroll run journal entry using the default data in each employee’s Payroll Ledger and the timesheet information you enter for the pay period. Click the numbers in chronological order.  • The By Pay Period Frequency box specifies the pay period of employees who are due to be paid as entered in the employees’ payroll journal. All periods indicates that all employees will be paid regardless of pay period frequency. You may, however, refine your selection of employees for payment by using the Payroll Run Status Bar () Cheque Details - This section provides payroll details for the employees paid in the cheque run. Cheque Details will be discussed in the next slide. Click to continue.  This TOTALS line summarizes the various amounts for the salaries that will be paid out on the specified pay date. • You need to fill in or select the bank account the payroll should be Paid From and the Starting Deposit Number (if the company uses Direct Deposit). The next cheque number available in the system automatically appears in Starting Cheque Number, but can be changed if necessary. • By default, Simply creates a payroll run journal to Pay multiple employees. If you wish to pay only one employee, you would select Pay one employee. You will learn more about paying one employee at a time later in this slideshow. •  Auto-Select has three options: • Not Yet paid on this Cheque Date – used for those paid 52, 24 or 26 times per year. • All for this Cheque Date – used when all employees are paid on the current pay period frequency. • All Employees – used when you wish to select all employees regardless of the pay period frequency.  Period End Date is the end of the pay period. It is usually the same asCheque Date, but when the pay period end falls on a holiday, the cheque date may be different.      

7. Cheque Details Below is the Income page of the cheque details for Doreen David. This employee is paid on an hourly basis. According to her Time Sheet, she had worked 80 regular hours and 2 hours overtime. Her income is automatically calculated based on the hourly rate specified in her Payroll Ledger. (See red arrows). Study the items under Other Amounts. This section shows that Doreen has an outstanding loan of $30.00. Click to continue.

8. Cheque Details Under the Vacation tab, it shows Vacation Earned, but no vacation paid for this period. Click the DEDUCTIONS tab and study it. It shows all deductions other than taxes in the current pay period according to the employee’s Payroll Ledger. Click the TAXES tab and study the deductions for taxes. It shows the employee’s current taxes deducted and the year to date figure. Calculations based on settings in the employee’s ledger. Click the ENTITLEMENTS tab. Nothing shows for this employee except the hours worked this pay period. Click to continue.

9. The Payroll Cheque Study the paycheque stub information that will appear on the paycheque when printed. Other paycheque styles are also available in Sage 50 Reports & Forms settings under payroll cheques. Click to continue.

10. Payroll Run Journal Entry If you display the Payroll Run Journal Entry, you will find a separate journal entry for each employee paid for the cheque run. Click on each of the numbers below.     Click to continue. Wages Expense + Overtime Exp = Gross pay + Vacation Earned* *Vacation Earned for 66.40, in this example is Retained, therefore is held in the Vacation Payable account, to be paid out at a later date. Cheque Details

11. Payroll Run Journal Entry (continued) Study the screen and click the remaining numbers below.     Cheque Details EI Expense = The employer`s portion of Employment Insurance. Click EI Payable is what the company needs to remit to the government. It isequal to the employee`s deduction (see cheque details) + employer`s contribution (EI Expense)

12. Payroll Run Journal Entry (continued) Study the screen and click the remaining numbers    Cheque Details CPP Expense = The employer`s portion of Canada Pension Plan is equal to the employee’s deduction (see cheque details). Click CPP Payable is equal to both portions, and is what the company needs to remit to the government.

13. Payroll Run Journal Entry (continued) Study the screen and click the remaining numbers  Cheque Details Income Tax Payable is the amount deducted from the employee’s pay and which the company needs to remit to the government.

14. Payroll Run Journal Entry (continued) Study the screen and click the remaining numbers   WSIB Expense = The employer`s premium for Workplace Safety Insurance (WSIB) for the specific employee. Click. WSIB Payable is what the company needs to remit to WSIB.

15. Payroll Run Journal Entry (continued) Study the screen and click the remaining number  Cheque Details  Bank Account Chequing = is the Net Pay amount of the cheque to be paid after taxes and deductions, to the employee. Click - In the following example, the employee also repaid 30.00 of a Loan borrowed from the employer, to reduce the Net Pay.

16. Payroll Run Journal Entry (continued) Click and study Other Payables. Click to continue. Cheque Details Other Payables are the amount(s) deducted from the employee’s gross pay according to the employee’s journal and as shown in the employee’s cheque details.

17. Entering Payroll Transactions: Processing a Single Paycheque If you need to process individual paycheques (in case you miss any in the normal paycheque run, if an employee is taking or re-paying an advance, or if you made a mistake in the original paycheque), you can use either  or  options below. Click ❶ then ❷ . When you select CREATE PAYCHEQUE under Paycheques, Sage 50 opens the Payroll Journal and allows you to select the name of the employee to whom you are issuing the paycheque. • If you select PAYROLL CHEQUE RUN, the Payroll Run Journal will appear, then you can click Pay one employee (see red arrow). This will open the Payroll Journal where you can select the employee to whom you wish to issue the paycheque. • Click to continue.  

18. When the Payroll Journal of the selected employee appears, a reminder about the employee will appear, if any loan or pay advance this example, a pop-up indicates that employee selected has a payroll loan of $30. This is a result of a note in Field 1 of the Additional Info page of the employee where the box to “Display this information when the employee is selected in a transaction” on Jordan Currie’s Payroll Ledger is checked. This display will also be in effect in a Payroll Cheque Run whenever any of the employees selected for the cheque run has Additional Info contained in his/her Payroll Ledger. Click Close on the Additional Info Note.

19. Entering Payroll Transactions: Processing a Single Paycheque (continued) Study the time sheet for which you want to process a paycheque. The INCOME Page of the cheque details should looks like this. The Commission Earned is $1,385.00. The Net Pay includes the $600 loan. Click. Vacation Earned = 4% of commission earned ($55.40). Click. Study the DEDUCTIONS Page. Click. Taxes on the TAXES Page are based on the taxes specified in the Taxes tab of the employee’s payroll ledger. Click to continue. Employee Payroll Ledger

20. Remitting Payroll Source Deductions As an employer, you have to remit the CPP contributions, the EI premiums, and income tax deducted from your employees' income, along with your share of CPP contributions and EI premiums. These deductions, along with your remittance form, must be received by the CRA on or before your remittance due dates. Due dates vary depending on the type of remitter you are. For more information, see www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/pymnts/menu-eng.html You would click on the Payroll Remittance icon, and the PAYMENTS JOURNAL appears. When you select Receiver General, the balances for CPP, EI and Income Taxes Payable will appear. You can TAB from the Amount Owing column to Payment Amount to select a payment for each particular item. Click the numbers in chronological order. • Remittance – The accounts are selected for a particular payroll authority as entered in the Settings for Payroll (see below).  This is the date of the cheque. End of Remitting Period – this instructs Sage 50 to show the deductions not yet remitted up to the date entered here. Remitting Frequency – Study the remitting frequency options below. Reference No. and Comment –You can enter information in these boxes which you can use for future reference.

21. Processing Vacation Pay If you retain vacation pay for employees rather than pay it out at every paycheque run, you need to release their vacation pay when they take time off, upon their request, or when they cease to work for the company. The total vacation pay owed appears in the Payroll Journal as Vacation Earned on the Vacation page of the Paycheque. Study the Vacation page of the Payroll Journal Entry below. If you are paying out vacation for an employee who normally retains vacation pay, enter the number of vacation hours paid in this pay period and/or its corresponding amount. If you do not enter any hours, insurable hours will not be recorded for the vacation taken. The number of insurable hours are required to establish entitlement to Employment Insurance (EI) benefits. The employment must be insurable in order to earn insurable hours. Click. To release vacation pay, enter the amount in the Vac. Paid field. Notice the changes in the Year to Date and Net Pay figures. Click to continue.

22. Processing Vacation Pay (continued) In the resulting Payroll Journal Entry, Vacation Payable is debited after vacation pay is paid. Click to continue.

23. Entering PAYROLL Transactions: Recording Accrued Wages Sometimes a payday that falls at the beginning of a month may include wages earned in the previous month. Example: On the calendar at the right, payday falls on Friday, February 7, which includes wages payable from January 26 to 31. Wages from January 26 to 31 are considered accrued wage expenses, and should be recorded in January. Click. Accruals are entered in the General Journal. Study the General Journal Entry for accrued wages expense for $1,360.00 that applies to January 26 to 31 (posted on January 31). This accrual entry needs to be reversed at the start of the next period before the next regular payroll date. Click to continue. payday

24. Processing T4 Slips As an employer, trustee, or payer, you are responsible for deducting Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and income tax from remuneration or other types of income you pay, remitting them to the Canada Revenue Agency and reporting them on the applicable slips. A T4 or Relevé 1 (RL-1 used in Quebec) slip is printed for each employee at the end of a calendar year after all payroll have been processed. This is the slip that is used by the employee in filing income taxes. See right for a sample T4 slip printed on pre-printed form provided by the Canada Revenue Agency (CRA). You are also responsible for complying with new regulations concerning payroll deductions. You can go to the website given below to find out what`s new. http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/menu-eng.html Click to continue.

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26. PAYROLL Reports The two common employee-related reports that you can print to help you manage payroll efficiently and accurately are the Employee Summary and Employee Detail reports– you may display/print payroll information for one employee or all employees. Click to display the Detail report. Click again to display one employee Summary report.

27. More… Go back to your text and proceed from where you have left off. Review this slideshow when you finish the chapter to better prepare yourself for the next chapter. Press ESC now, then click the EXIT button. EXIT