Laying a Proper Foundation

Accurate Payroll setup and upkeep is fundamental to using the Payroll package to produce pay checks. The following discussion indicates the records you need to set up and roughly the order you need to set them up in. For your convenience, this section contains links to topics which describe how to set up the corresponding records.

The cornerstone of the Payroll package is the employee record and creating pay checks for employees is a main focus of the ActivityHD software. PRCodes are the basis for payroll calculations. PRCodes define pay types, deduction types, tax types, and statistics. These types comprise the check lines on an employee's pay check. Source, Rate, and Result expressions are defined on PRCodes to derive check amounts.

General Employee Information

The following items can be defined and assigned to employee records:

Statuses track an employee's employment status, determine whether the employee is paid when a Payroll Process is run, and determine whether the employee is accruing leave.

Attributes represent ways of categorizing employees and payroll distributions such that the employee or distribution fits only one category per attribute. Attributes are classified as employee attributes, distribution attributes, or rollup attributes. Attributes can be sourced or non-sourced. A sourced attribute borrows its attribute items from another system resource such as another attribute, customers, rollup items, segment items, employees, or vendors. The attribute items for a non-sourced attribute are user-defined.

Attribute items are the individual values that a particular attribute can take on. For instance, if you have an attribute named "Department", the attribute items could be the names of the various departments in your company.

Human Resources Information about Employees

If the Human Resources package is installed at your site, certain additional codes can be set up for tracking information about an employee.

Ethnic origins are used to associate the race designations used by your company with the Equal Employment Opportunity Commission's terminology.

Job categories are used to associate employees with appropriate EEO-1 and EEO-4 categories.

Positions can be assigned to employees and help define your organization's reporting structure, track job vacancies, and provide pay rates for check calculations. On a position, you can designate the employee's pay grade, supervisor, and current and historical pay rates in terms of the employee's unit of pay.

Leave ledgers track the accumulated leave balances for employees. Entries to the leave ledger can be made manually or by processing a leave plan.

PRCodes

Since PRCodes are the basis for payroll calculations and PRCodes are comprised of segment items, it is helpful to next define the elements which may be part of the segment item definition:

• Run types determine the characteristics of payroll runs. Once run types are set up, you can create payroll runs.
• Check line groups group check lines for calculation and reporting.
• Tax entities are used to to provide information for federal, state, or local tax calculations.
• Check stub items are the lists of totals which print on pay check stubs or direct deposit advice.
• AP controls carry the information needed to post from Payroll to Accounts Payable in order to generate AP invoices. AP controls are only available if the Payroll to AP interface is enabled.

There are five built-in segments in ActivityHD Payroll: Type, Pay, Deduction, Tax, and Statistic. If you need more segments to build PRCodes, you can define them at this stage of the set-up process.

Next, define the segment items for each segment. Segment items have the following functions:

• Define which groups a check line contributes to.
• Contribute to the lists on check stubs or direct deposit advices.
• Define how items are posted to the general ledger.
• Determine how sources, rates, and results for a check line are calculated.
• Define income tax calculations.
• Define the scale for the source, rate, and result.
• Declare parameters.
• Determine if a deduction or tax PRCode is qualified by employee or employer.
• Define which run type a PRCode belongs to.

Once the precursors are in place, you can set up PRCodes. PRCodes pull together the calculation expressions, parameters, check line groups, and GL accounts for each check line and distribution line. PRCodes perform the following functions:

• Establish the type of a check line.
• Assign check line groups and tax entities for calculation and reporting.
• Define posting to the general ledger.
• Define calculation parameters.

If you have the Human Resources package installed, you can create time codes and assign them to PRCodes to make time sheet entry faster.

Other codes

Note types are used to organize payroll notes. You can create notes on employees, checks, positions, segment items, employee records (ACA records, garnishments, W-2s, W-4s), and employee contacts.

Export employers and export submitters are used for electronic filing of files produced using export controls such as W-2s (USA) and T4s (Canada).

Tax deposit types identify the fields to track for calculating payroll tax deposits. Tax deposit records link to the AP payments used to make tax deposits.

A pay check affects at least three GL entries: accrual, liability, and cash. ActivityHD allows you to merge the cash side immediately to facilitate positive pay and bank reconciliation but to postpone the expense allocation until later.

GL postings are summarized into one accrual entry, one liability entry, and one cash journal entry per GL period. Within a GL entry, postings are summarized by day. The control calendar associated with the payroll liability account determines the period dates. (If no GL segment requires a calendar, ActivityHD Payroll uses the default calendar.)

Postings are summarized into unmerged journal entries if they exist; otherwise, new entries are created.

Only check result amounts are posted to GL.

Accrual posting as of the distribution date

Facts about the accrual posting:

• Accrual postings come from the distribution lines on the check.
• The distribution date typically defaults to the work date on the check line unless a default distribution date is specified on the payroll run. The distribution date can also be changed due to a split period, follows pay, or manual override.
• The credit side of the GL entry uses the payroll liability account from the check.
• The debit side of the GL entry uses the account on the distribution line. This account is derived from the following:
  • the combination of employee attributes assigned to the employee
  • the debit account on the PRCode
  • the partial entry on the time sheet line
  • Any overrides on the distribution line.

Accrual Posting
	Debit	Credit
Pay	Pay Expense	PR Liability
Employee Deduction
Employer Deduction	Deduction Expense	PR Liability
Employee Tax
Employer Tax	Tax Expense	PR Liability
Statistic	Statistic Debit

Liability posting as of the liability date (check date or work date)

Facts about the liability posting:

• Liability postings come from the deduction and tax check lines.
• The posting date of the GL entry is determined by the rightmost segment item on the PRCode and is either the check date or the work date.
• The credit side of the GL entry uses the deduction liability or tax liability account from the PRCode. Individual PRCode segment items can contain wildcards; however, the account derived by combining the account masks on the segment items must be a valid account.
• The debit side of the GL entry uses the payroll liability account from the check. If none of the GL entries has been merged, the payroll liability account can be changed to affect GL.

Liability Posting
	Debit	Credit
Pay
Employee Deduction	PR Liability	Deduction Liability
Employer Deduction	PR Liability	Deduction Liability
Employee Tax	PR Liability	Tax Liability
Employer Tax	PR Liability	Tax Liability
Statistic

Cash posting as of the disbursement date

Facts about the cash posting:

• Cash postings come from the disbursement lines on the check.
• The credit side of the GL entry uses the bank account from the check.
• The debit side of the GL entry uses the payroll liability account from the check.
• If you change the bank account on an unmerged check, the bank account is changed on all disbursement lines. If you change the bank account on a merged check, the change only affects disbursement lines that have not already been printed, direct deposited, or otherwise marked with a reference.

Cash Posting
	Debit	Credit
Disbursement	PR Liability	Bank