v.5 Payroll: Best Practices (Course #V229)

Transcription

1 v.5 Payroll: Best Practices (Course #V229) Presented by: Barbara Garrison Shelby Master Trainer 2017 Shelby Systems, Inc. Other brand and product names are trademarks or registered trademarks of the respective holders.

2 Objective In this session you look at some of the advanced issues relating to the Shelby v.5 Payroll module and payroll processing. This session presents the following topics: Common mistakes o Setting up a Minister payroll record o Understanding Compensation and Deduction categories o Missing State/Local Taxes Changing a Payroll check date (Let s talk) Processing ACH/Direct deposit Options for printing/ ing vouchers Making corrections o Prior to finalizing your Payroll o Replacing a lost or damaged check o Voiding a check o Ooops I misclassified the Housing Allowance W2 Wizard Gifts to staff Cash vs. non cash TSA Deductions/Matching Contributions HSA in BOX 12 coded W on W2 Cost of employer sponsored health coverage in BOX 12 coded DD on W2 Minister s W2 Watch your 941, State, and W2 reports Using a Custom tab for HR information 2

3 Common Payroll Mistakes Misclassifying Pastors Make sure the Check Here If Minister check box is selected on the Employee Information screen if the employee is a minister. Add Minister Date as an option. Selecting this check box causes an override of compensation being subject to Social Security and Medicare taxes. No Social Security or Medicare taxes are withheld on a minister. Exempts Ministers from Federal Withholding. (Minister can opt to have voluntary federal/state withholding.) It also allows the use of compensation categories that pertain to Ministers only, such as housing allowance (discussed later in session). 3

4 Not understanding Compensation and Deduction categories All the major Compensation and Deduction categories are set up for you. It is recommended that you use these existing categories and only add new ones if absolutely needed. Certain information on some of the existing compensations/deduction categories cannot be accessed or changed. The most common Compensation Category is Salary/Hourly (Regular Wages). Use the predefined Salary/Hourly (Regular Wages) Compensation Type for all employees, including ministers. You do NOT need to create a special compensation type for ministers. Do not confuse Subject to with actually withholding taxes. Ministers are subject to Federal and State taxes even though you may not be withholding them. Do not worry about the Subject to social security and Medicare option for a Minister. By selecting the Check Here If Minister check box when setting up the Minister s record, you override the withholding of Social Security and Medicare taxes. Make sure you specify the Distribution Information for each compensation type that you use. Only Compensation Types with distributions are used when you are setting up employee information. 4

5 Each Compensation Type can have multiple distributions (e.g., salaries may have distributions for Administrative Salaries, Secretarial Salaries, Custodial Salaries, and so forth). Therefore, a Compensation Type for each salary description is not necessary. You would simply add a separate distribution for the salary Compensation Type. The Distribution Description, not the Compensation Type, provides the description that appears on the pay stub and account links to the General Ledger. You need a separate Distribution Information for each payroll compensation distribution you want linked to separate General Ledger accounts. Some Compensation Types may need only one distribution, and others may have several distributions. This is normally determined by how detailed you have set up your chart of accounts. 5

6 The various Deduction Types your organization uses must be configured before you run your first payroll. Different Deduction Types have different tax consequences. Each Deduction Category is set up to correctly show or not show on the W2s, how the deductions are to be taxed, and where each deduction is distributed in General Ledger. Add a separate Distribution Type for each deduction type, as needed. Some deductions may have only one distribution, and others may have several distributions. This is normally determined by how detailed you have set up your chart of accounts (e.g., Cafeteria plan may have distributions for dependent coverage, disability, and so forth). Therefore, a Deduction Type for each cafeteria plan description is not necessary. You would simply add a separate Distribution Type for each cafeteria plan description. Remember, the Distribution Description, not the Deduction Type, displays on the employee s check. 6

7 Deduction linked to Liability account Deduction linked to Expense account You cannot delete a compensation or deduction category that has pay history associated with it. 7

8 Housing Allowance for Ministers only (linked to one GL account) Housing Allowance for Ministers only (linked to mulitple GL Accounts) 8

9 Leaving off State/Local Taxes Make sure that all employees have State/Local Tax information, if required. Watch your quarterly reports! If you are not withholding state/local taxes from a minister, be sure to put the applicable State/Local tax category on the minister s record and choose Exempt Do Not use Table. This puts the amount that is subject to state tax in box 16, leaving box 17 blank for State income tax withheld and the same for local in boxes 19 and 20 on form W2. If desired, the minister can voluntarily have federal and state taxes withheld. If the amount of compensation is not included in the amount subject to state and local taxes wage basis, make a correction using the ADD STATE AND LOCAL TAXES utility under Utilities > Shelby Tools. This affects prior periods if you are correcting for the entire year. Enter a date range for period needed to add State/Local Taxes that were missed. 9

10 Incorrect Payroll Check Date If for some reason a payroll is processed with the wrong check date, Shelby provides a utility to correct this. (Payroll check dates affect all payroll reports.) From the General menu of the Shelby Dashboard select the Utilities link. From the Utilities Home Base select Shelby Tools and then select Change Payroll Check Date on the Utilities List. Run this utility to change a check date on payroll checks. This changes every check with that date. REPEAT: EVERY CHECK! Every Check! On the Change Check Date screen select the Wrong payroll date from the drop down list and then enter the correct date in the New Date box. 10

11 Processing ACH/Direct Deposit Work with your Bank Shelby v.5 conforms to NACHA standards. The ACH Direct Deposit feature allows your church to use the ACH (Automated Clearing House) to transfer money from your bank to the employee's bank. The system prints a voucher for the employee instead of a check and creates a file to send to your financial institution for the transfer. Work with your bank to get the employer information set up properly. From the top menu of the Payroll Home Base screen select Utilities > Employer Information. Select tab 3 ACH Direct Deposit and enter your information. File Location Make sure the path is set correctly (desktop or favorite location). Mask routing # and Bank Account # on Vouchers? Once the employer information is set up, you need to set up each employee for direct deposit. From Employee Information select ACH from the Navigator menu. Split compensation between multiple accounts by either a dollar amount or percent. When collecting information from employees, ask for a voided check, not a deposit slip, for all checking accounts. Use your Cross Check to scan the account information. 11

12 Printing/ ing Vouchers Set Up Employer Information Use the Vouchers tab to set up SMTP server information to payroll vouchers to employees. The voucher is attached to the message as a secured PDF file (if the Secure PDF check box is selected in the PDF Export options). The employee is prompted to enter the last four digits of his or her social security number to open the file. The SSN is masked (except for the last four digits) on checks and vouchers. From the top menu of the Payroll Home Base screen select Utilities > Employer Information. Enter your server information on tab 5 Vouchers. Send Test to verify the s are sent. 12

13 Set Up Employee Information The employee s Primary address is used for ing payroll vouchers. (An option is available to send to all addresses linked to the employee.) In GlobaFILE, check Demographics to make sure each employee has a primary address. Processing Vouchers Process your payroll as usual. When you are ready to print checks, make sure that you select the Print vouchers on plain paper check box. Checks for employees who have not requested ACH print first. After the checks have printed, you are asked to load plain paper for the vouchers. 13

14 Next the following screen displays. This occurs when the ShelbyPrinter displays and is necessary for ing the vouchers. Click the OK button. Next, vouchers with addresses are displayed on the Print Preview Screen. From this screen select File > Save As > PDF Document. On the next screen set the Save File As and select the Secure PDF check box. The Permissions Password is your Shelby customer number. 14

15 Click the Yes button on the next screen. The Send Mail screen displays next. Check the Server information, Subject, and Message. Select the Send to Primary only check box if that is your intent. When left unselected, a copy of the voucher is sent to all addresses included on the employee s demographics tab in GlobaFILE. Now be patient and allow the s to be sent. After they have been sent, a report displays showing s sent. Print this report. After ing the vouchers, save a copy of the file (PDF) in case an employee requests one. Next, vouchers for employees without an address prints. Print the voucher on plain paper. 15

16 The last report to print is your ACH Verification Report. Print a copy. 16

17 Making Corrections Before you Finalize your Payroll Under Payroll (Employees to Pay) double click on the employee. The Add/Change Time Card Information window displays. Here you Add, Update, or Delete Compensation, Non Cash, and Deduction information. Hint: Also add sick and vacation hours for salaried staff here if needed. 17

18 Example changed hours to Example added one time deduction for HSA Example added vacation hours 18

19 Replace a Lost or Damaged Check Use Check Express You do not have to use Payroll. In Check Express enter a deposit for the net amount of the original check. Distribute the deposit to a clearing/wash account. Both the Journal Entry and Bank Reconciliation entry wash. 19

20 Next enter and print a check to the individual for the net amount of the original check. Distribute to the same clearing/wash account as above and same date. Both the Journal Entry and Bank Reconciliation entry wash using the two entries. In Bank Reconciliation go to Outstanding Items and open the original check. Note in the description Replaced by check xxxxx. When the replacement check clears, reconcile the original check and the two Check Express entries. 20

21 Void a Check There are two methods for voiding a previously written check: Void Check or Manual Negative Check. The method you choose depends on whether or not the tax deposit has been made. If the tax deposit has NOT been made, then use the Void Check option under Utilities. If the tax deposit HAS been made, use the Manual Check option to enter a negative check using the same check number as the original check and use the date of your next upcoming payroll for the check date. This results in your federal tax deposit being properly calculated. When finished, the net amount should be the same as the original check. 21

22 Sample Compensation tab enter as a negative amount the original gross compensation. Sample Deduction tab enter as negative the amounts of original deductions. Sample Tax tab enter as negative amounts the original taxes that were withheld. Make sure the net amount of the manual check is the same as the original check. 22

23 W2 Wizard Correcting W2s The W2 Correction Wizard utility is used to change information that prints on an employee's W2 by writing a manual check. Choose any of the records on the grid and make corrections as needed. Use the Wizard to: o Change Minister designation Minister change from non minister to minister status for this adjustment (does not change on employee detail record). This affects the FICA amount in Boxes 4, 5, and 6. Not a Minister change from minister to non minister status for this adjustment (does not change on employee detail record). This affects the FICA amount in Boxes 4, 5, and 6. o Change compensation distribution types change the type and amount for selected checks. o Change deduction distribution types change the type and amount for selected checks. o Add non cash compensation select the compensation type and amount to add. o Add or Change State/Local types select the tax table from the drop down list for selected checks. After you finish using the W2 Correction Wizard, the manual check(s) that are created during the process are entered into the system but not finalized. You need to finalize the check(s) before changes appear on the W2. Keep in mind that corrections made here only apply to the W2 report and do not affect the employee's detail record within the Shelby Payroll program. 23

24 OOPS PAYROLL DEPARTMENT DID NOT SET UP THE HOUSING ALLOWANCE CORRECTLY DO NOT LET THIS HAPPEN TO YOU!!!! Here are the facts A call came in early January 20xx from ABC Church (name has been changed to protect the innocent). In October of the prior year the Church Board approved the Pastor s request to adjust his housing allowance for the remainder of the year. There were four remaining payroll periods. The payroll department made the adjustment to the housing allowance manually when running the November 5 th payroll. After the November 5 th payroll was run, the payroll department forgot to change the employee s (Pastor s) payroll information to reflect the change in the housing allowance the Church Board had approved. Long story short, the next three checks the Pastor received in 20xx were incorrect and did not reflect the approved housing allowance change for the remainder of 20xx. Sooooooo just dealing with the facts, the Pastor s earnings for the last three payrolls in 20xx needed to be corrected. ABC Church needed a solution. Earnings before correction 24

25 Using Manual Check corrected the missed housing allowance for 2015 ($1,500). Earnings after correction NOTE: IF YOU HAVE ALREADY FILED YOUR 941 QTR REPORT, YOU MAY HAVE TO AMEND IT. 25

26 Gifts to Staff Cash and Non Cash Need to include on W2: o Non Cash Gift Card o Cash/Check Set up Non Cash Compensation under Compensation Information GL link to Non Cash clearing account. Use Manual Check under Utilities. Non Minister Staff Need to Gross Up to cover Social Security and Medicare Taxes; enter check number(discuss) and date. Under taxes enter the amount of Social Security and Medicare taxes. 26

27 Sample Manual Check Register for Non Cash Gift Card 27

28 TSA Deductions/Matching Contributions TSA Deduction Types are already established for your convenience. On the Deduction screen the required W2 and the required Subject to withholding information is set up. Set up either a single or multiple Distribution Types. Why would you set up multiple Distribution Types? Make sure that the employee withholding is linked to a liability account and the employer matching is linked to the appropriate expense account. Shelby v.5 makes the correct journal entry to record both the withholding and matching amounts to the correct general ledger accounts. (When you pay your TSA provider, distribute only to the liability account.) 28

29 When adding the deduction to the employee, select the Deduction Type and Distribution Type, Type, Amount/Percent of withholding, and Matching percent. Set a limit to cap the withholding per allowed IRS limits (consult your plan administrator). When processing Payroll, a 403 (B) Matching Contribution Report is generated after the checks and vouchers are printed. The report only includes those employees who have an employer matching amount. Employees with TSA deductions but no employer match are not included on this report. A query report can be written to include both if needed. Make sure that on the employee tax screen the Pension Plan Qualified check box is selected. This appears on the W2 in Box 13 Retirement Plan. 29

30 Health Savings Account (HSA) An employer s contribution, including an employee s contribution through a cafeteria plan, to an employee s HSA must be reported in Box 12 of Form W2 and coded with a W. If your employees elect to participate, a pretax deduction needs to be set up with Box 12 coded W. Since this is a pretax deduction, no Subject to check boxes are selected. The deduction is distributed to a liability withholding account. 30

31 If the church also decides to contribute to the employee s HSA, a non cash compensation type needs to be set up. Record the amount of the employer s contribution with each payroll, or enter a year todate amount at the end of the calendar year using a manual check. A Non cash Compensation Type needs to be set up with Box 12 coded W. Since this is not included as income, no check boxes are selected for Subject to. The non cash compensation is distributed to liability non cash wash account. 31

32 To enter, from the top menu of the Payroll Home Base screen select Utilities > Manual Check. Under tab 1 Compensation select the Non Cash Compensation Distribution that was previously set up. Enter the amount of the employer contribution. No taxes need to be included since the employer contribution is not taxable. Run the edit report to verify your entries. The W2 should reflect the total of the Employer Contribution of $3, and the amount the Employee elected to be withheld $3, in Box 12 coded with a W. 32

33 Cost of Employer Sponsored Health Coverage With changes that occurred in the passage of the Affordable Care Act, the cost of employer sponsored health coverage must be recorded on the employee s W2. Currently, the cost of employer sponsored health coverage must be reported on the employee s W2 in Box 12 coded DD if you file 250 or more W2s. Enter this amount under employee information HEALTH CARE VALUE. Record the cost of the coverage with each payroll, or enter a year to date amount at the end of the calendar year. The date that is entered is used when running your W2s. 33

34 Getting the Minister s W2 Correct Sample Earning Report to verify totals Sample Minister W2 (review the boxes) 34

35 Quarterly/Annual Payroll Reports Each quarter make sure your 941 and State/Local reports balance to Employee Earnings Report. Start with balancing your 941 quarterly reports. 35

36 Next, run an Employee Earnings report for the year. Sample Employee Earnings Report Summary Using the Employee Earnings report reconcile 941 wages to Employee Earnings Report. 36

37 Use a Custom Tab for HR Information 37

38 Q&A Class Discussion 38

39 Barbara Garrison Shelby Master Trainer Barbara is a Shelby Master Trainer for Shelby v.5 and ShelbyNext. She began training for Shelby Systems in 1995; however, her experience using Shelby software began in 1985 when she worked as the Shelby Administrator for one of the largest churches in Dallas, Texas. Prior to working for Shelby, she and her husband owned BT Computer Consultants. Together they worked with organizations ranging from medical offices to school districts and churches assisting them in utilizing software to meet their financial and recordkeeping needs. Barbara s true passion is working with churches. Her goal is to help every church with which she comes in contact get the most out of Shelby software products. She enjoys training and having one onone interaction with Shelby users.