Setting Up Payroll

While you can administer payroll manually within Sage 50 Accounting, there are a number of advantages to subscribing to a service plan that includes payroll, including automatic calculation of employee earnings, deductions and taxes:

• Gets you the latest federal and provincial payroll tax updates as soon as they are released.
• Eliminates the need to manually prepare payroll cheques, and T4 and RL-1 forms at year-end.
• Enables you to prepare payroll in-house and avoid costly outsourcing fees.
• Reduces the risk of payroll tax penalties at year-end by accurately calculating your employees' earnings and deductions.

Before you sit down to set up your company payroll, make sure you have the following information handy:

To set up:	You will need:
Federal Taxes	Contact information for remitting taxes withheld on paycheques. Your EI contribution rate.
Provincial Taxes	Contact information for remitting taxes withheld on paycheques.
Incomes	A list of the types of incomes that your company uses (for example, hourly wages, or commissions). Information about if and when federal and provincial taxes are calculated for the incomes.
Other Payments and Deductions	A list of other benefits (for example, retirement plan matching contributions) and deductions (for example union dues) that affect employee paycheques. The amount or percentage for each employee, any annual limits that apply, and the relevant tax calculation information. You will also need contact information for monies you will be remitting (for example, union dues).
Payroll Schedule	Payroll schedules for your employees (for example, bi-monthly or weekly)
Employees	Contact information, hire date, SIN. Income types for each employee. Other payments and deductions that apply to most of the employee's paycheques.

Before you set up your company-wide payroll options, you should review the list of accounts in your chart of accounts.

You want to make sure that all of the accounts your company needs for payroll have been added to your chart of accounts. It is possible, for example, that you might want to add a new account to your company to track employer-paid contributions or additional wage expenses.

If you are not sure if you need to add accounts, check with your accountant.

Once you are satisfied with your chart of accounts, display and then print a copy of the Chart of Accounts report. This will help you set up other aspects of your company's payroll.

Once you have all of the accounts you need, you are ready to add your company-wide payroll settings. These settings affect all employees, so it is a good idea to finish them before moving on to individual employee payroll options.

In the Home window, open the Setup menu, select Settings, and then Payroll:

1. Review the pre-defined payroll incomes, make any necessary changes to the applicable taxes, and set up the deductions and additional incomes your company requires.
2. Enter the default rates for calculating payroll taxes.
3. Set up any entitlements that you want to track.
4. Set up the government tax authorities you are obliged to remit payroll remittances to.
5. Add any Job Categories your company uses
6. Re-name (or remove) any of the following:
7. Provincial payroll taxes
8. WCB
9. Payroll entitlement boxes
10. User-defined expense in employee records
11. Additional Info boxes in employee records

7. Select the linked accounts to use for transactions involving the following payroll-related expenses:

• Payroll incomes (including advances, and vacation owed)
• Payroll deductions
• Payroll taxes
• User-defined payroll expenses
• Payroll Expense Groups.  Set up payroll expense groups to further refine how you track payroll expenses for your employees. (Sage 50 Premium Accounting)

Once you have set up the payroll options that affect all of your employees, you can create individual employee records and add payroll information in the employee record window.

1. If you subscribe to a service plan that includes payroll, select the tax table for calculating the employee's payroll taxes.
2. Add the employee's tax information.
3. Set up the employee's payroll incomes.
4. Set up the employee's payroll deductions.
5. If you pay different WCB Rates for your employees, enter the workers compensation payment rate in the employee's record.
6. If there are any additional expenses that you incur as the employer (for example, retirement plan matching contributions), add them to the employee's record.
7. If you are using entitlements, set up the calculations in the employee's record.
8. If you are using direct deposit, enter the employee's bank account information.

Historical Amounts

If you created your company recently in Sage 50 Accounting and are working in History mode, you need to enter total amounts that your business has already recorded for your employees to date. Think of historical amounts like opening balances that you enter for bank accounts.

You may need to enter previous amounts on the following tabs:

• Taxes
• Income
• Deductions
• WCB & Other Expenses
• Entitlements
• T4 & RL-1 Reporting

Example

When you enter historical amounts in employee records, the amounts are also added to the corresponding Year-To Date columns.

Year-To-Date Amounts

Year-to-date amounts track the total amount contributed or earned for incomes, deductions, and expenses in a calendar year.

Direct deposit lets you deposit paycheques directly into your employees' bank accounts. There are two ways that you can provide direct deposit service to your employees:

• Use the Sage 50 Accounting EFT Direct program
• Subscribe to the Sage 50 Accounting online Direct Deposit service

Once you have finished setting up your company's payroll, it is a good idea to go over all of your settings to ensure that nothing has been left out and that all of the information entered is correct.