This chapter contains the following topics:
To understand how to use Passport’s Passport Business Solutions Payroll, you should understand some key concepts and words that are used in this module. Major concepts in Payroll are identified in alphabetical order below.
Accounting is the function that provides quantitative information about your company through the collection, categorization, and presentation of financial records.
See ACH or Automated Clearing House
When the manual refers to alphanumeric, it means letters of the alphabet, numerals (numbers), special symbols (*,&,$,etc.) or any combination of all three kinds. In contrast, numeric (or digits), means only numbers.
An adjustment is a transaction that changes existing payroll information, or it can be an entry to record a payroll check you write by hand, as opposed to a check printed by the PBS Payroll system. When entering an adjustment, you must supply all the numbers (gross wages, taxes, deductions, etc.). The PBS Payroll system does not calculate these numbers.
ACH or Automated Clearing House
The ACH Network is a highly reliable and efficient nationwide batch-oriented electronic funds transfer system governed by the NACHA OPERATING RULES that provide for the inter-bank clearing of electronic payments for participating depository financial institutions. The Federal Reserve and Electronic Payments Network act as ACH Operators, central-clearing facilities through which financial institutions transmit or receive ACH entries.
NACHA (National Clearing House Association) is The Electronic Payments Association, out of Herndon, VA, that develops electronic solutions to improve the payment system. For more information on NACHA go to their web site at www.nacha.org.
A path of accounting information that can be followed either forward or backward. A piece of accounting information usually comes from somewhere, or is going somewhere. Part of this information for example, a document number is used to track where it came from, or where it is going. The path made by tracking this information is the audit trail. PBS posting reports and journals are considered audit trail reports. Purging reports are also considered as an audit trail.
Displaying a report on screen will not satisfy an audit trail requirement because the displayed report goes away. Printing to a printer or disk are the best options.
Reconciliation means bringing into agreement. When reconciliation is applied to checkbooks, it means balancing your checkbook, or, bringing into agreement the balance of your checkbook and the balance shown on your bank statement.
A cost center is a part of your company (for instance, a department or a regional office) for which sales and/or expenses (and sometimes costs) can be calculated separately from the total sales and expenses of the whole company.
Cost centers also apply to sales. A typical use for tracking sales by cost center is for a company which has several sales offices. By making each sales office a cost center, you can separately track the sales performance of each office.
Refer to the Account Number Format section of the Company information chapter in the PBS Administration documentation for complete information on Cost Centers.
Most of the information you enter into your computer is stored on the disk. In order for computer programs to be able to locate specific pieces of data (within large masses of data), and to be able to process data logically, data must be organized in some predictable way. The Passport Business Solutions accounting software organizes your data for you automatically as it stores it on the disk.
There are five terms you should understand about the way the data is organized:
A character is any letter, number, or other symbol you can type on your computer keyboard.
A field is one or more characters representing a single piece of data. For example, a name, a date, and a dollar amount are all fields.
A record is a group of one or more related fields. For example, the fields representing a customer’s name, address, and account balance might be grouped together into a record called the customer record.
A record in a data file is often referred to as an entry.
A data file is a group of one or more related records. A data file is often referred to simply as a file (without the word data).
The Employee File in Payroll is an example of a data file. Such a file is made up of several records, each of which contains the name, address, etc. for one employee.
Each file is kept separately from other files on the disk.
(There are other types of files in addition to data files. For example, programs are stored on the disk as program files. However, references to file in this User Manual mean data file unless specifically stated otherwise.)
This means Direct Deposit Processing, Direct Deposit Payroll or Direct Deposit Protocol. For Payroll ACH Direct Deposit we use Direct Deposit Payroll. See Direct Deposit
A deduction is an amount taken from the wages of an employee by the employer. However, unlike a tax, a deduction is not normally paid to a government agency. Deductions are typically made for voluntary activities such as savings plans, medical insurance, car allowances, etc.
The frequency of a deduction is how often the deduction is taken. For example, a deduction taken every week has a weekly frequency. A deduction taken only once a month has a monthly frequency.
Instead of receiving a paycheck, an employee can choose to have the pay deposited directly into their bank account(s). Alternatively, the employee can choose to have only a portion of the paycheck deposited directly, and receive the balance as an actual check. As a proof of payment a direct deposit mailer can be supplied to the employee.
As used in the PBS Payroll, distribution means either:
| • | The act of allocating amounts (such as wages) to GL accounts |
| • | An amount allocated to a GL account. |
For example, when you pay an employee, you enter (or the computer calculates) information about how much to pay, what taxes to withhold, what deductions to make, etc.
In addition, you distribute (allocate) the amount of the wages to one of your GL expense accounts for salaries or hourly wages, and to your cash account. The Payroll module collects all distributions to GL accounts, and will either print a report summarizing these distributions or will automatically transfer them to the General Ledger module when appropriate (if you use it).
Earned income credit (EIC) is essentially a negative income tax. Certain classes of wage earners who earn very little are paid by the government for not earning more money. Employers make EIC payments to qualified employees on the government’s behalf. The employer generally pays EIC out of withheld income, social security, and medicare taxes.
A 401(k) plan is a deferred compensation arrangement in accordance with IRS Code Section 401(k), whereby an employee can elect to have the employer contribute an amount to the plan on the employee’s behalf. Amounts contributed to the plan per the employee’s election are treated as employer contributions to the plan and are not subject to federal income tax withholding. There is a yearly maximum on the amount an employee can elect to defer. This maximum is subject to annual adjustments for inflation.
In addition to elective contributions (described above), employers can provide matching (nonelective) contributions. These contributions are not subject to taxation.
Additionally, employees can choose to make additional, voluntary contributions to the plan. Such contributions are after-tax deductions and are subject to all applicable taxes.
Employees over 50 can elect to contribute an additional amount to the 401(k) plan.
As used here, function means one or more programs that accomplish a specific task.
Each selection on a menu for a The Passport Business Solutions module is a function. When you select a function from a menu, one or more programs automatically execute, thereby allowing you to accomplish the task you select.
When your company makes sales and receives payments, this activity affects not only accounts receivable, but also the area of accounting called general ledger.
General ledger is the area of accounting where all accounting records are brought together to be classified and summarized. Financial statements are printed based on this data.
As used here, general means pertaining to many areas. general ledger is often abbreviated G/L or GL.
Ledger means a book where accounting records are kept. (This term evolved from pre-computer times when accounting records were kept exclusively by hand in large books called ledgers.)
A general ledger account is a specific category under which all financial activity of a certain kind is classified. For example, you might have a general ledger account called telephone expenses under which you categorized your telephone bills. General ledger account is often abbreviated GL account.
Typically, an independent business has a hundred or more GL accounts. In the Passport Business Solutions accounting packages, each time any financial activity occurs in any area of accounting, the dollar amount is recorded under the appropriate GL account numbers, defined by the user.
Refer to the Account Number Format section of the Company information chapter in the PBS Administration documentation for complete information on General Ledger Account Numbers.
Help refers to descriptions of functions which appear on your screen by pressing a designated key; <F8> in Character mode and <Ctl+F1> in Graphical mode. The Help text gives you a quick reference to the highlights of the function you are running. See the note in Look-ups
When a set of accounting packages is integrated, any information generated in one area that is needed in another area is automatically supplied to that other area. You do not have to enter the information twice.
Passport accounting software is fully integrated. When Payroll is used with other Passport Business Solutions packages, any information recorded in those other packages which the Payroll module should know about can be automatically transferred to the Payroll module.
There are two kinds of lookups: Data Lookup and Date Lookups.
Data Lookup
Look-ups refer to a list of available entries for a particular field. Many fields allow you to press a designated key <F8> to show all available data on file. In graphical mode you may also click on the lookup button.
For instance, when entering a time worked distribution you may press this key at the Account number field to bring up a list of all G/L accounts on file. Selecting an entry from this list is often easier and faster than remembering the account number or stepping through all possible entries until the right one is reached.
|
Note |
For character mode screens, depending on where you press <F8>, this function will return a Look-up window or context sensitive Help. If a Look-up window is returned, pressing <F8> a second time will display Help for the field if available. |
Date Lookup
The date lookup provides a point and click window for finding and entering date fields.
In Graphical mode the date lookup is available via the <F4> key and clicking on a date lookup calendar button. In Windows Character mode access the date lookup via the <F7> key. For UNIX/Linux character mode there is no date lookup.
Multi-Company refers to the capability to do accounting functions for multiple companies with the same set of software.
Payroll defines the wages you pay as an employer to your employees. Payroll is often abbreviated PR.
Payroll taxes are those amounts related to payroll wages that are paid to government agencies. Commonly, four payroll taxes are paid to the federal (U.S.) government: social security tax, medicare tax, personal income tax (federal withholding), and federal unemployment insurance (FUI).
Many states and local governments also assess payroll taxes: additional personal income tax (state withholding), state unemployment insurance (SUI), etc.
The employer and employee typically each pay part of the required social security and medicare taxes, with the employees’ portion being withheld from their pay checks. The employer usually pays the entire FUI and SUI amounts.
To post means to take transactions from a temporary file and move them to a permanent file (where other transactions probably already exist). For example, Payroll time transactions are initially entered into a temporary Time Transaction File. After the transactions have been entered and edited (pay calculated and checks printed), they are posted to the permanent payroll history files.
Often, during transaction posting, information in other data files is also updated. For example, in Accounts Receivable, when sales are posted, the account balance and historical sales figures in the Customer File are also updated.
This is a Direct Deposit ACH verification test conducted with your processing bank to verify the accuracy of the employee receiving bank’s routing/transit number and bank account number.
Processing Bank is the direct deposit bank that will process payments in the ACH file. In most cases, this is your bank. However, if your bank were sending the ACH file to a Federal Reserve for processing, then it would be the Federal Reserve Bank. This information becomes the Immediate Destination in the Ctl Banks setup and gets written to the direct deposit ACH file.
See ACH or Automated Clearing House
Receiving Bank is every unique bank that is used by employees entered in the payroll system for direct deposit ACH processing. The routing information is set up in Ctl Banks.
There can and often will be multiple bank account numbers entered in Employees for each receiving bank.
See ACH or Automated Clearing House
SPOOL is an acronym meaning Save Printer Output Off-Line. Spooling is a technique that allows a report to be printed at a later time. Instead of reports going directly to a printer, they are saved as a disk file (which is usually a lot faster). When a printer is available, all or some saved reports can be printed in one long run (for example, overnight).
Printer command language, also know as PCL, was developed by Hewlett-Packard in the mid 1980's for inkjet printers.
Many PBS forms provide an alignment when using a Company information laser printer. This alignment is done using PCL codes. PBS works with printers that use either PCL 3, 4, 5 and 6 standard.
A supplemental benefit is an amount contributed by the employer to a fund from which employees generally have a right to benefits only upon layoff and after meeting eligibility requirements. Supplemental benefit funds are used to augment state unemployment insurance. In the Payroll system, supplemental benefits are calculated and reported only. No G/L distributions are made as a result of these calculations.
Supplemental earning is a special category of earning (such as a commission or bonus) that is usually taxed at the supplemental rate specified in federal and state tables.
As used in accounting, transaction means a business event involving money and goods or services. For example, a transaction occurs each time you fill your gas tank: you pay money in exchange for gasoline (goods).
Because computer software deals primarily with business events which have already taken place, in the Passport Business Solutions software the word transaction means the record of a completed business event involving money and goods or services.
The records of sales made and payments received are examples of transactions from the accounting area called accounts receivable. The records of your purchases and the payments you make for such purchases are transactions from the accounting area called accounts payable. The records of quantities of goods received or sold are transactions from the accounting area called inventory control.
Workers’ compensation is insurance which provides for payment to an employee in the event of certain kinds of on-the-job injuries. The premiums for such insurance are normally paid by the employer to a state or private agency. A few states require that the employee pay part of the workers’ compensation premium.
The Passport Business Solutions Payroll module provides the following features:
| • | Has employee file maintenance and lists. |
| • | Handles both hourly and salaried employees on daily, weekly, bi-weekly, semi-monthly, monthly, and quarterly pay frequencies. |
| • | Prints a payroll worksheet to assist in gathering payroll input information. |
| • | Allows entering and editing of time-worked information, with an edit list and a register. |
| • | Handles a wide variety of special deductions and earnings, including 401(k) plans and direct deposits. |
| • | Handles supplemental earnings specifically. |
| • | Automatically calculates standard payroll. |
| • | Allows reports to be stored on disk to save computer time, then printed later at your convenience. |
| • | Allows use of multiple printers. |
| • | Prints a payroll register and deductions register. |
| • | Prints payroll checks and a check register. |
| • | Can be interfaced to Check Reconciliation to reconcile the checkbook from which payments to employees are made. |
| • | Allows entering, editing, and posting of handwritten checks and adjustments, with an edit list and register. |
| • | Prints a report showing all payroll distributions to general ledger. |
| • | Prints a history report, union deductions report, and hours report. |
| • | Prints a standard quarterly report, a 1099 report (for non-employee compensation), and a year-end W-2 information report. |
| • | Quarterly reports can be printed in customized formats. |
| • | State quarterly unemployment insurance reports and annual withholding reports can be made on magnetic media. |
| • | Direct deposits can be made to multiple employee financial institutions and bank accounts. |
| • | Social security numbers and employee bank account numbers are masked on screens, reports and posting registers. |
| • | Can be interfaced to General Ledger and Job Cost, or can be used by itself. |
| • | Includes password protection. |
| • | Has Help built into the software. |
An easily maintainable Control File allows you to set various controls that tailor this module to your business. These controls determine factors such as:
| • | whether distribution to GL accounts is done automatically or manually. If it is done manually, you must enter GL account numbers |
| • | pay factors for overtime and special pay |
| • | the number of hours in your pay periods |
| • | whether meals and tips are to be used for restaurants |
The Deductions/Earnings Codes File contains the voluntary deductions and miscellaneous earnings that you define in the system. You can define as many as you like.
The Deductions/Earnings Report can be printed on request.
You can easily maintain tables of federal, state, and city withholding amounts, earned income credits, employer and employee social security and medicare taxes, and FUI and SUI percentages and maximums. Workers’ compensation premium calculation information is also included and easily maintainable. The Tax Tables List can be printed on request.
Besides the usual name, address, social security number, pay frequency and rates, taxable status and control information, and year-to-date figures, the Employee record contains hire/review information and available vacation and sick hours for control.
Each employee can be assigned any of the three fixed deductions (union dues, loan repayment, and wage garnishment), plus up to nine deductions/earnings which you define. The union deduction, as well as any other deduction you define, can be a fixed amount, a rate per hour, or a percentage of gross wages.
You can assign a frequency code to each employee’s deduction/earning to indicate how often it is to be deducted or paid to that employee.
You can print an employee list by employee number or name on request.
In the Time worked selection, you can automatically generate standard payroll transactions (entries) for employees whose pay is being automatically distributed (not designated for manual distribution) to G/L accounts, and is not complicated by overtime, special pay, or temporary deductions or earnings.
You can also enter individual payroll transactions (which you must do for employees designated for manual distribution), or edit any existing payroll transactions, including the ones automatically generated. With the individual payroll transaction, you can enter up to six one-time temporary deductions or earnings. (Meals and tips are entered this way.)
You can process hourly and salaried employees together or separately.
The module also handles supplemental pay such as bonuses or commissions.
A Payroll Attendance Worksheet can be printed to aid in preparing time entries before you actually enter the information.
You can print an edit list for corrections before you go on to the next selection, Calculate payroll.
You can enter up to four weeks of advance vacation pay. (A separate check is printed for each week.) Any attempt to over-pay vacation or sick pay, or to pay a terminated employee, results in a warning message.
Remaining vacation time can be printed on the check stub.
After you have entered and edited all time information, the software automatically calculates gross pay, taxes, EIC, and any voluntary deductions. The software calculates federal, state, and city withholding taxes and accommodates multiple state and multiple city payrolls.
You can choose to have taxes calculated on fixed amounts specified for the employee, rather than using standard calculations. (Options must be used in the Employee File to indicate this.)
You can use daily, weekly, biweekly, semi-monthly, monthly, quarterly, and miscellaneous pay frequencies.
After the payroll is calculated, the Payroll Register and Deductions Register are automatically printed. These show full detail of all pay, taxes, EIC, and deductions for each employee.
The current pay period’s gross pay, social security, medicare, federal, state, and city taxes, any EIC, net pay, and any voluntary deductions are summarized for the current period and year-to-date. The report also shows employer liability totals for workers’ compensation, social security, medicare, and federal and state unemployment.
You can print payroll checks at any time after the payroll has been calculated. The starting check number is entered at the beginning of the printing procedure.
Provisions are included for restarting check printing from any specified check and, if necessary, to recover from a printer jam. All or specific checks can be voided if desired. After printing checks, a Payroll Check Register is automatically printed, showing each check number, payee name, and amount. If you are directly depositing amounts from your employees’ paychecks, a Register of Direct Deposit amounts are also printed.
If you are using direct deposit for your employees’ pay, a direct deposit register is printed after each check run. This shows you the amount that will be transferred to the employee account(s).
There are two types of direct deposit in Payroll: Electronic ACH payment and Report only. Electronic ACH payment is separately licensed where Report only is a standard feature in PBS Payroll.
Electronic Payment
If you are using the PBS Payroll ACH Direct Deposit add-on feature, then during a check run your system will print mailer forms and create a direct deposit ACH file which may be transferred to your bank.
A Pre-Notification feature provides a means of verifying an employee’s bank account information before you start directly depositing the employee’s pay.
For setting up electronic payment direct deposit, read the Implement Positive Pay and Direct Deposit appendix.
The Check Reconciliation (C/R) module can be integrated with any or all of the Passport Business Solutions Accounts Payable, Accounts Receivable, and Payroll packages. You can transfer information from these packages automatically into C/R.
Using C/R, you can reconcile checkbooks periodically with bank statements and produce a reconciliation report, a checkbook, and a checking account activity report.
Both check and direct deposit payments are pulled into C/R. Direct deposit payments may be pre-cleared.
Entering and posting of transactions for hand-written payroll checks and adjustments are provided. Handwritten checks can be entered or computer-written checks reversed, and adjustments can be made to employees’ quarter-to-date and year-to-date totals or to G/L distributions. A Payroll Adjustments Edit List is provided as an aid to doing these actions.
When adjustments are posted, a Payroll Adjustments Register is automatically printed.
You can print a Payroll History Report on request, showing the earnings, taxes, and total voluntary deductions for each check for each employee within the specified range of pay period dates or check dates. A second report showing employer expenses for these checks can also be printed.
You can print a QTD/YTD (Quarter-to-date/Year-to-date) Time Worked Report at any time to show regular, overtime, special, holiday, vacation, and sick hours. Vacation, holiday, and sick pay are also shown. Information for each employee, quarter-to-date, and year-to-date totals are included. (Refer to the Employee Reports chapter.)
You can print a Union Deductions Report on request, showing each applicable employees’ hours, rates of pay, and amount deducted within the selected time period. (Refer to the Employee Reports chapter.)
You can print a report showing estimated Workers’ Compensation premiums. (Refer to the Employee Reports chapter.)
You can print a report of 401(k) contributions. Both elective and non-elective contributions are shown. The report can be printed with check detail or summarized by employee. The report can be printed in either check date or pay period data order. (Refer to the Employee Reports chapter.)
You can print a Quarterly Payroll Report, a Year-End Payroll Report, W-2 forms, 1099 forms (for non-employees), and a 1099 Information Report.
Additionally, you can report Federal W-2 information, 1099-MISC information, state quarterly unemployment insurance reports, and state annual employee withholding tax reports on magnetic media.
The software automatically records the distributions to various GL accounts for all payroll activity. You can print a Payroll Distribution to GL Report on request. You would normally do this at the end of each accounting period.
You can either automatically interface this module to General Ledger or use it as a stand-alone product.
Passwords are required to access PBS. A password is a unique code you assign to each individual using the Passport Business Solutions software. Each potential user must first enter a valid password before being allowed to use a protected function.
One of the file utility function is to provide the capacity to recover corrupted data files. See the PBS Administration documentation for instructions on using the file utilities.
(pronounced as separate letters) ODBC is short for Open DataBase Connectivity. ODBC is a pipe that connects data from Passport Business Solutions files to popular ODBC compliant spreadsheet and reporting applications like Microsoft™ Excel, Access and Crystal reports. ODBC is a separately licensed software and installation which requires a separate purchase. XDBC™ is the product that allows PBS to interface with your data via ODBC.
In Windows you can easily select any one of more of the most popular printers. Additionally, instructions are given to allow you to interface the software to other printers.
Acrobat PDF and HTML file generation provides two ways to save and view reports. You may also send some forms to a PDF file, but checks are not included.
The functions and instructions to enable you to upgrade from an earlier version of this same Passport Business Solutions or RealWorld classic module are included on the PBS disk or download. The EZ Convert Utility provides a fast way to convert multiple companies all in one step.