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Summit Tax & Accounting, LLC
3040 N. University Decatur, Illinois 62526 Phone: (217) 877-6766 Fax: (217) 875-4647 Email: info@sta-cpas.com
Website: www.SummitTaxAccounting.com
July 2015
Sandy, the church bookkeeper, would like to use her PowerChurch Plus program to prepare the weekly payroll. She opened the payroll module and realized she needs HELP!!
We have been walking through a series on the setup of your payroll module. Whether you are starting from scratch, need to make changes, or want to make sure your payroll module is set up correctly, this newsletter series is for you! Read more for Part 3 of walking through the payroll module setup…
Welcome back!
Last month we continued walking through the payroll module setup process. As promised, this month we will continue the payroll setup.
If you did not join us last month, you may wish to review Vol 33 and 34
newsletters (Resources/Links tab on our website) before continuing with this newsletter. Otherwise, it might be like starting to read a book in the middle instead of at the beginning.
Is your payroll module
setup correctly?
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Continuing Payroll Setup – Here We Go!
Last month we ended with the setup of income payroll items. This month we will cover the setup of:
Retirement Deduction Items Health Insurance Deduction Items Federal and State Tax Deduction Items Contribution Deduction Items
Liability Accounts for Deduction Items
In most cases, you will need liabilities in your chart of accounts that relate to amounts deducted from employee paychecks. Examples include:
Retirement (Pensions)
Health Insurance (May be optional) Federal Taxes
State Taxes
The next screen in the payroll module setup process BEGINS the setup for your liabilities. Some payroll items may need to be set up after the initial payroll module setup is completed.
Retirement
If you will be deducting pension from an employee’s paycheck:
1. Click on the box next to “Setup a retirement deduction item”.
3 2. Choose the liability for one of the employees who will have
retirement deducted from their paycheck. You can setup only one retirement deduction item at this point. If you have more than one participating employee, you will need to set up their retirement deduction items once the initial payroll module setup is completed (shown later).
Note: There is a default chart of account number for “Retirement Withheld”. However, it is VERY IMPORTANT to have a liability for each employee for whom you are withholding retirement.
A. The liability should also bear the employee’s name. It is much easier to make sure the retirement withheld is actually being paid into the employee’s retirement account if you have a separate liability per participating employee.
B. You can add the chart of account number by clicking on the green plus icon.
C. Don’t forget to choose the “Plan type”.
A B
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Health Insurance
IMPORTANT!! The Affordable Care Act has changed the rules for health
insurance payments to/for employees. Make sure your payroll packages are in compliance! You are welcome to call us with any questions.
If you will be deducting health insurance from an employee’s check, it is NOT important to have a liability in place for each participating employee…unless the employee is paying the entire cost of the health insurance.
You may:
1. Set up a liability in which to flow the insurance withheld. - Per employee, or
- Per group plan
* Click the box next to “Set up a health insurance deduction item”.
* You may set up only one payroll item and liability chart of account item here. If you need others, they will need to be set up later (shown later).
2. Or, in some cases, the best option is to have the deduction flow as a credit to the expense to which you will code the employer portion of the health insurance.
- To use this option you will have to make a change in the payroll setup preferences (shown later).
- To use this option you will not check the box next to “Set up a health insurance deduction item”.
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Federal Taxes
There is a default liability for federal taxes. Simply use the looking glass drop down to choose the Federal Withholding Liability.
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State Taxes
There is also a default liability for state taxes. Follow the same steps you followed for the federal taxes…but instead choose State Taxes Payable.
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Contribution Deductions
If your employees would like to have their tithe or other offering withheld from their paycheck, you will need to set up a payroll item for each contribution type to be deducted.
1. Check the box next to “Setup a contribution deduction item”. 2. Choose the contribution fund.
- Note: You do not have the option of setting up your
contribution fund as you did the chart of account numbers. - The contribution fund will need to be setup in the contribution
module (directions not shown in this newsletter).
You may only set up one contribution deduction item at this point. If others are needed they can be set up later (shown later).
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Finish
Finish sounds great, but…
… Now the real fun begins!
9 Once you have completed the initial setup, you may need to set up additional items. You can now go into the payroll module to complete your payroll item setup!
More than one participating employee with retirement deductions
Click on: Accounting, then Payroll, then Setup, then
Maintain Item Descriptions
Click on “Add”, then choose “Other Deduction”
10 Several steps here:
A. Choose your item number.
B. Add the description. (Remember to include the name of the employee.) C. Choose or setup your liability account.
D. Tax Options - choose “Retirement deduction”.
E. Using the drop down arrow, choose the “Box 12 Code” for the plan type. Continue these steps until each participating employee for retirement deductions has both a payroll item and a liability chart of account number.
D E C B A
11 Special setup needed to flow health insurance deductions to an expense instead of a liability
Click on: File, then
Preferences, then Accounting Setup
Click on the “Payroll” tab, then uncheck the box beside “Validate accounting transactions”. Click “OK”.
12 You can now set up your payroll item for health insurance deductions that will flow as a credit to the expense to which you will code the employer portion of the health insurance. To add these payroll items:
Click on: Accounting, then Payroll, then
Setup, then
Maintain Item Descriptions
Click on “Add” and choose “Other Deduction”.
Several steps here:
A. Choose the Item Number.
Note: You will need a payroll item for each expense line or liability line you will need to credit.
B. Add your description.
C. Enter the expense or liability to which you wish the withheld amount to flow.
Note: The wording beside the chart of account number will always say, “Liability account”. The chart of account number will be an expense or a liability line.
13 D. Tax options: This will depend upon your health insurance plan. Your
insurance carrier will be able to tell you if the deduction is: - An after tax deduction, or
- A pre-tax deduction A B S a n d y , t h e c h u r c h b o o k k e e p e r , ? C S a n d y , t h e c h u r c h b o o k k e e p e D S a n d y , t h e c h u r c h b o o k k e e
14 Set up other contribution deduction items
Go into the Maintain Item Descriptions, click on “Add”, then choose “Contribution Deduction”.
Enter the “Item Number”, “Description”, and choose the “Contribution Fund”.
15 Set up other items as needed
You can now go into your payroll module to set up any other payroll items as needed. You may have the need for other payroll items such as:
- Taxable income items (example: non-accountable reimbursements)
- Employer liability items (example: employer match items) - Deductions (example: child support payments)
If you need help with any of these items, we are here to help you! Just give us a call!
The initial payroll setup is complete!
Only 3 more sessions needed! 1. Entering your employee information and pay items. 2. Processing payroll.
3. Payroll tax payments.
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As always, if you need any help with your PowerChurch software you are more than welcome to contact us at Summit Tax & Accounting, LLC. No question is too small or too big. We are here to help you!
