Payroll Incomes and Deductions
You will find the Incomes and Deductions setup options in the Setup menu, under Settings, and then Payroll.
When you process a paycheque for an employee, any calculations that apply to the employee's incomes and deductions are calculated for you in the paycheque window.
Incomes
Incomes are the cash and other material benefits that employees receive in the course of their work. You can have up to 28 unique payroll incomes in Sage 50 Accounting. Depending on the income, it may be subject to taxes; it may also need to be factored into vacation amount calculations. To reduce your company set up time, Sage 50 Accounting provides a number of pre-defined incomes whose applicable taxes cannot be changed. These incomes have all of the calculations and taxes selected in accordance with federal and provincial requirements. If you need to add incomes other than those provided (for example, a car allowance), check with the appropriate tax authorities to determine which taxes the new income is subject to.
Incomes pre-defined by Sage 50 Accounting
Advances. This income tracks pay advances that you might provide to employees. You cannot change the applicable taxes for this income.
Loans. This income tracks pay advances, not subject to taxes, that you might provide to employees.
Benefits. This income only tracks non-insurable taxable benefits subject to federal tax for employees in all provinces. (For employees in Québec, this income can be used to track benefits that are not subjected to Québec provincial tax.) You cannot change the applicable taxes for this income. If you want to control where certain benefits are reported on T4s or customize the kind of taxes you want to track for a benefit, you can set up new payroll incomes.
Benefits Québec. This income tracks non-insurable taxable benefits exclusive to Québec. You cannot change the applicable taxes for this income. If an employee receives more than one Québec benefit and you want to control where benefits are reported on RL-1s, you can set up new payroll incomes.
Vacation Earned. This income tracks the amount of vacation pay an employee has earned. You cannot change the applicable taxes for this income.
Vacation Paid. This income tracks vacation pay that you have released to an employee. You cannot change the applicable taxes for this income.
Regular. This income tracks hourly wages paid to employees. If you have staff that work on salary, use the Salary income. You can change the taxes that apply to this income.
Overtime 1 & 2. These incomes track overtime pay that employees receive. Multiple overtime incomes are provided in case you need to have two different overtime pay rates. Their tax settings, however, should be the same. You can change the taxes that apply to this income.
Salary & Commission. Use these incomes to track employee salaries and commissions. If your company doesn't pay employees by salary or handle commissions, you can rename these incomes and change the applicable taxes.
Note: If the taxes applied to any of the pre-defined incomes do not match the taxes that apply to incomes specific to your company, use one of the undefined incomes to set up a new income with the correct taxes.
Depending on your company's payroll incomes, you may need to change some of their Income Types.
Deductions
Deductions are monies withheld on employee paycheques. Depending on the deduction, some or all taxes may have to be calculated before the deduction is subtracted from cheque. There are no pre-defined deductions in Sage 50 Accounting, so will need to check with your federal and provincial authorities to determine which deductions you need to define and which taxes apply to specific deductions.
Deduction types and examples
Statutory. Deductions that you are required to withhold for all employees. For example, CPP, QPP, and federal and provincial income taxes. Only in Québec are provincial taxes collected separately from federal taxes.
Other Deductions. You may be required to withhold monies from some employees for legal reasons. For example, garnishments or family support deductions.
You may need to withhold monies from employees because of company-compulsory deductions. For example, union dues or the employee's portion of benefit plan premiums.
Some employees may opt to have monies withheld voluntarily. For example, charitable donations or retirement plan contributions.