Background

This article will cover the proper initial setup for using the Payroll feature in AccountEdge for Canada.

Using the payroll feature, you can:

• Process payroll for your employees
• Track, pay and report employee accruals and entitlements
• Pay accrued payroll liabilities
• Print pay stubs and paycheques

Before Using Payroll

Before you start using the payroll features, you need to:

Enter general payroll information

To enter General Payroll Information:

• Go to Setup > General Payroll Information from the menu bar at the top of the screen
• Enter the current payroll year
• The number of hours in your normal working week (Regardless of the number of hours indicated here, the actual hours paid will be indicated on an employees paycheque, this is just the default)
• Select your Province
• (Optional) Enter your company's tax details - you can always come back and enter this later

Load tax tables

To load tax tables:

1. Click Setup > Load Payroll Tax Tables from the menu bar at the top of the screen
2. Click Load Tax Tables

Payroll taxes are amounts withheld from employee payroll according to the rules established by the government taxation authorities. In software, these calculation rules are stored in a tax table file that you load into your company file. If you intend to process payroll in AccountEdge Pro, you will need to be on the latest version of AccountEdge and enroll in the Payroll Tax Service to keep your tax tables current.

Review payroll categories

You can review your payroll categories by going to:

1. Lists > Payroll Categories from the menu bar at the top of the screen
2. Click on the Payroll Category list (Wages, Deductions, etc) you want to review

The components of an employee's pay, such as wages, accruals, expenses, and withholding taxes, are called payroll categories. These are assigned on an employee's card to calculate payroll. It's a good idea to review the details of each payroll category to make sure it matches the way you do business.

Setting Up Employees

You'll need to create an employee card for each employee. On the employee's card, you'll store name, address and optional information, as well as payroll information. You'll start with setting the basic details and then the wage, deduction, expense and tax information.

Creating Employee Cards

1. Select Lists > Cards to open the Cards List
2. Click the Employee tab
3. Click the New button and enter the employee's name and contact information
4. Click on the Payroll Details tab
5. Enter the Social Insurance Number (SIN)
6. Select the provincial tax table
7. Optionally enter the employee's Birth date, Hire date, Pay Stub Delivery and Pay Stub Email address (if you intend to email pay stubs to the employee)

Adjusting Wage Information

1. Click on the Wages link on the left-hand side of the window
2. Enter the Pay Basis (as Salary or Hourly)
3. Enter the Annual Salary or the Hourly rate
4. Enter the Pay Frequency
5. AccountEdge Pro will have set a default wage expense account; change this only if there is a specific need
6. Select the applicable wage categories by placing a tick to the left of the wage category

Adjusting Deduction Information

1. Click on the Deductions link on the left-hand side of the window:
2. Select the applicable deduction categories by placing a tick to the left of the deduction category
3. Enter Deductions other than withholding taxes
4. Check Add New Payroll Categories if you need to add additional categories

Adjusting Expense Information

1. Click on the Employer Expenses link on the left-hand side of the window:
2. Select the applicable expenses by placing a tick to the left of the expense category. AccountEdge Pro will have selected the default expenses. You'll just need to verify them.
3. We'll review Vacation Entitlements below
4. Check Add New Payroll Categories if you need to add additional categories

Adjusting Tax Information

1. Click on the Taxes link on the left-hand side of the window
2. Verify AccountEdge Pro has selected the appropriate withholding taxes for the employee

In the upper, right-hand area of this window, select Federal TD1. Indicate the employee Net Claim amount, which is available from the employee's federal TD1 form. Alternatively, you can select to use the Basic Personal Amount for Net Claim, and AccountEdge Pro will enter the correct amount based on the latest payroll tax tables. Select Provincial TD1, and indicate the provincial Net Claim amount. Again, you can opt to use the Basic Personal Amount for Net Claim

[Optional] Adjusting Time Billing Information

1. Click on the Time Billing link on the left-hand side of the window:
2. Enter the appropriate Time-Billing rate for the employee. Use of this rate is determined by selection on the Activity profile.

Vacation/Holiday Pay Entitlement is implemented using two or more, payroll categories. One category is expense category: 4% Vacation Pay - Accrued, or 6% Vacation Pay - Accrued. The other category is the wage category: Vacation Pay - Accrual Paid Out.

The accrual, expense categories accrue the entitlement, which is paid out with the Accrual Paid Out wage category. The accruals are added to a liability account and subtracted from that liability account as they are paid out. You may have more than one accrual category.

Configuring Vacation Pay

Both the accrual and the wage Paid Out categories need to be associated with the employee (ticked).

The Vacation Accrual category should be an Accrual type of (employer) expense. The Expense Basis is based on a regular wage category. If more than one wage category applies to employees, or if employees have several different wage categories, the accrual should be based on the Gross, Federal or Provincial wage category. When the accrual is based on a category other than a single wage category, you must Exclude the Vacation Pay - Accrual Paid Out category from the accrual. This is done by placing a tick on the Accrual Paid Out line in the Exempt window of the Vacation Accrual category. This will prevent the accrual from accruing on the paid out amount.

The Vacation Accrual is often paid out every pay period. If this is the case, you would not select the Automatically Adjust Base Hourly or Base Salary Details option in the Paid Out wage category, since the Accrual Paid Out is paid in addition to regular pay. If, on the other hand, you wanted to pay a vacation leave pay in lieu of regular pay, you would select this option.

To set this up:

1. Go to Lists > Card List from the menu bar at the top of the screen
2. Select the Employee from the list
3. Click on the Accrual Balances link on the left-hand side of the window
4. Select the applicable accrual category by placing a tick to the left of the accrual category. This is the category used to calculate entitlement vacation pay.
5. For each line, click in the Carry Over column if you need to add accrued amounts from a period before AccountEdge use. If, by agreement with your employees, the employees are to have accrued amounts available at a specific time such as first of the year, or an employee anniversary, you would add the amount in this window.
6. Click the arrow to the left of the category name to configure the accrual
7. Make a note of the Linked Payable Account (it's typically a liability account)
8. Type of Expense should be Accrual
9. Tick whether or not this item should be printed on a cheque stub
10. Indicate the basis percentage
11. Select the wage category this accrual will be based on: Base Salary, Gross Wages, etc.
12. Check off Carry Remaining Expense Over to Next Year if the accrual balance gets carried forward into the next year. Note: if you do not check this you will need to enter an adjustment to remove the accrual's balance from the Linked Payable Account when completing the start a new payroll year process.
13. The linked wage category for this accrual should be the Vacation Pay - Accrual Paid Out wage category
14. Click OK when you are complete
15. Click on the Wages link on the left-hand side of the window
16. Place a tick to the left of the Vacation Pay - Accrual Paid Out category to associate it with the employee
17. Click the arrow to the left of the Vacation Pay - Accrual Paid Out
18. Place a tick in the Optional Account area to Override Employees' Wage Expense Account
19. Indicate the Payable account you noted from the Accrual category configuration window
20. Click OK when you are complete

Paying Vacation Wages

If using timesheets, the Accrual Paid Out wage will appear as a line item; you could indicate the Paid Out hours on the timesheet. Whether you are using timesheets or not, the Accrual Paid Out wage will appear on the employee's stub.

In the Select and Edit Paycheque window, verify the line item exists, and enter the hours (if desired), if not already entered. In any case, verify (or enter) the dollar amount you are paying out. This value should match the Vacation Pay - Accrued expense amount (shown in the Expense area of the paycheque). Continue processing payroll as normal.

Paying the employee with the Paid Out wage category will consume the value accrued by the 4% or 6% Vacation Accrual category (reducing the accrual entirely).

Vacation Pay Accounting

The Accruals are expensed when they are accrued. Both the employer and employee CPP and EI taxes are withheld when the accruals are paid out.

Using Recurring Pay

To set up recurring pay:

1. Go to Lists > Card List from the menu bar at the top of the screen
2. Select the Employee from the list
3. Click on the Recurring Pay link on the left-hand side of the window
4. If the employee is Salaried, or if the employee is Hourly and you are not using TimeSheets, recurring payroll values can be indicated in this window.
5. You can adjust the figures as necessary

You can also set the value of the Vacation Pay - Accrual Paid Out category. If the accrual and payout are nearly constant from pay period to pay period, you can indicate the payout value as a recurring wage category. During a payroll run, you'll need to confirm the payout value matches the accrual amount, but for most cases, no extra editing is required.

Normally, the Type of Wage for the Vacation Pay - Accrual Paid Out category is Hourly. As a result, a recurring value cannot be set if you are using timesheets, because its value would be set on a timesheet or paycheque. However, you can change the type of wage to Salary. After making this change, you'll be able to set a recurring value for the Vacation Pay - Accrual Paid Out category regardless of whether you are using timesheets or not.

To add a new payroll category:

1. Go to Lists > Payroll Categories from the menu bar at the top of the screen
2. Click on the specific category
3. Click the New button
4. Follow the steps to create the new payroll category (ie: enter a name, make any selections)

Paying Payroll Liabilities

Payroll liabilities comprise your employer expenses and amounts withheld from an employee's pay that must be paid to an appropriate authority or agency. Payroll liabilities are recorded when you process payroll. When you need to pay these amounts, you can use the Pay Liabilities feature.

To pay your payroll liabilities:

1. Go to the Payroll module and click Pay Liabilities
2. Specify how the payment is to be made. If you are paying the vendor electronically using Vendor Payments, select Group with Electronic Payments
3. In the Pay from Account field, type or select the account you are making the payment from
4. In the Vendor field, type or select the authority or agency to whom the withheld amount is being paid
5. Select the type of liability you are paying from the Liability Type list. By default, all payroll categories for the selected liability type are included in the payment. If you do not want to include all payroll categories:
   • Click the search icon in the Payroll Categories field
   • Deselect categories by clicking in the select column next to each payroll category you want to exclude
   • Click OK
6. In the Dated From and the Dated To fields, type the period in which the payroll liabilities were withheld. The payroll liabilities withheld during the specified period appear in the Payroll Category section.
7. Click in the select column next to the payroll liability amounts you want to include with this payment
8. The total of the selected liabilities appears in the Total Payment field
9. Click Record