Additions and Deductions for use in generating Payroll can be added by going to Employees → Additions and Deductions. This screen allows you to set up items that add or deduct income from the employees check.
On the General tab there are three options under the type pull down:
- Addition – Means that using this on an employee’s check will increase the amount of their check. An example of this is a $100 spiff that the company gives per month to cover a cell phone bill.
- Company contribution – Means that the company will be putting its own money into an account such an expense account for an employee’s 401K that they match.
- Deduction – Means that if this type is used then the employee takes money out of the employees check automatically. An employee may choose to have 5% of their pay taken out of their check to build a 401K.
The method of which you choose to have the money handled can be based on timesheet hours, based on a specific quantity, flat amount per check, percentage of net (after tax) or by percentage of gross (before taxes). These dollar amounts will be set up per employee in the Enter Employees screen. Also, a particular vendor can be selected so that AP bills are automatically generated when the employee’s checks are printed as well as the liability account.
You may also set limits on how much can be contributed in a given in a year, per check or you can set it up as a declining balance so something can be paid off over time. The Reporting Type is a very important selection here because it determines how your newly entered addition\deduction appears on the reports.
Taxes That Apply To This Item tab
The Taxes That Apply... tab allows you to apply the newly entered item to payroll tax items. One thing to be aware of is for deductions, selecting a tax will lower the taxable amount of the check and for additions, selecting a tax will raise the taxable amount of the check. Also, if you select a tax item here it will automatically select the addition\deduction in the Taxes That Apply... tab of Enter Payroll Tax Items.