OVERVIEW - PAYROLL PROCESS

P/R SYSTEM REQUIREMENTS FILE:

Cash account

Expense accounts (paid/billed)

Advance account

Post W/C

Print emp address on checks

Type of check format

Type of invoice format

Where to get Check hold code

How to tax individual timecards

FUTA rate/limit

Whether to print hours, and what type

Whether to print SS# on paycheck

Whether cumulative billing is in effect

Whether to use the Inv Handling code

BEGIN CYCLE:

Deletes any unposted Advances

Deletes previous “merged” time file

Brings in Constant file for updating

If cum bill in place, deletes the Cum Billing file

(based on user response)

Has NO effect on individual timecard batches that exist

TIMECARD EDIT:

When the timecards are edited, the system picks up from the job order the:

Labor Distribution (Branch/Division/Class),

Pay rate,

Bill rate,

OT bill rate, if any

DT bill rate, if any

SIT state code,

SUTA state code,

Local tax code(s), if any

SDI state, (if any),

W/C code/state,

Emp SS#

Cuscode

Job skill code #1

Customer sales rep

When the timecards are edited, the system picks up the following from the employee file:

Employee branch

Employee’s division

Employee’s category

Employee name

Pay frequency

Employee vs. contractor

Any changes made to these fields in the job order or employee files AFTER the batch has finished editing the final time will NOT be picked up for the current payroll.

MERGE:

Once a batch has been merged, most TC data cannot be changed.

Only timecards in the “merged” batches will be paid or billed.

Only batches that have “passed” during the edit process can be selected for merging.

DUPLICATES:

These reports are for assistance in catching errors BEFORE checks or invoices are printed.

The act of printing the reports does NOTHING to affect your payroll process one way or the other!

CALCULATE TAXES:

It is during this process that the system will look at the Employee file to obtain FIT marital status, number of dependants, and any extra FIT tax info (like EIC, more tax, less tax).

From the employee file it will also note whether or not to calculate and withhold FICA and Medicare.

The system also pulls in the marital status and exemptions/credits from the employee’s state, local, and SDI files. (It already knows what states and localities are involved since it grabbed that info during the TC edit.)

The employee deduction file is also brought in during this option.

The employer FUTA, SUTA and W/C costs are calculated during this step, as well as the employer portion of FICA, Medicare, and any other employer paid taxes.

For each employee paycheck (one per timecard), the system will calculate gross pay (hoursxpayrate + adjustments hoursxrate and/or flat amount), will subtract appropriate pre-tax deductions, will calculate taxes and subtract them, then subtract deductions, add expenses, and finally, subtract advance amount.

If the PR system file says to “Summarize and reallocate”, then the system will have combined individual check gross amounts (for all checks belonging to an employee within a single w/e date) before taxing. It then divides the taxes among the employee’s checks.

During this step the system will also make certain that there is no check for more than $12,000.00, and that no check will end up with a negative net pay.

Last, but by no means least, the system calculates a BILLED DOLLARS amount for each timecard. This figure gets written into the paybill record for the timecard. This amount is used on various sales reports (and GP reports). Even if you are processing a “bill only” payroll, you must calculate taxes in order to create this figure!

PRELIMINARY REPORTS/GP REPORT:

Again, these reports will have NO EFFECT on your payroll if you skip them. They exist as an additional safeguard checking for errors prior to the printing of checks or invoices. We HIGHLY recommend them.

(Don’t have time? Then when will you find time to correct them?)

PRINT CHECKS:

The system will do a final calculation of taxes before building the print file of checks. Any changes made to an employee’s tax status or deductions will be picked up at this time.

The system will display for you ONE LAST TIME the check date and starting check number to be used, the cash account that will be charged for these checks, the sorting sequence for printing the checks, and the default check message.

Do NOT under any circumstances answer YES to post your checks to Bank rec until they have actually printed and someone has inspected them - at least make certain the check date is correct, and the micro coded number at the bottom matches the printed check number!

It is the action of posting to Bank rec that will add the checks to your Positive Pay and/or Direct Deposit files (if you have those programs).

ONCE YOU ANSWER YES TO POST TO BANK REC, YOU ARE “PAST THE POINT OF NO RETURN”.

DO NOT GO BACK AND MAKE ANY CHANGES/ADDITIONS/DELETIONS TO THE MERGED FILE AFTERING POSTING TO BANK REC!!

If you “accidentally” answer NO to post to Bank rec, you will still get a print file of checks, and those check numbers will print on your payroll reports, and will be added to the employee’s pay history during the Update steps. The checks would NOT be added to direct deposit, or Positive Pay. Furthermore, should you try to void one of these checks - it will not let you since it does not exist in Bank rec!

PRINT INVOICES:

(You do not use this option if these timecards are to be saved for cumulative invoice printing).

During this option the system will grab the Department field info from the job order. If you discover the department is incorrect, you can still correct the job order at this point.

The system will give you ONE LAST CHANCE to change the starting Invoice number and date, the default invoice message, the selected sorting sequence, the late fee date and percent, the type of invoice, and whether or not to use the invoice handling code.

If any customer in this merged file uses the Department field for sorting, then a special report will be generated for last minute department changes.

The system will produce an edit in your outqueue. Should this edit have errors, a message will display on your screen, along with the question of whether you want to post these invoices to the general ledger.

There are ERRORS that are OK to post - a prime example is a result of a timecard entry for a credit to an existing invoice, which in the meantime has been paid by the customer! Your credit memo will make the invoice go into a credit balance - which is OK (temporarily).

The Edit will display whether or not the error is a fatal one that would result in the invoice not getting posted.

If you choose to proceed with posting even with a “terminal” error, all invoices WITHOUT an error will post, except the terminal invoices.

It is POSSIBLE, but uncommon, that a posting could update the A/R ageing, but not the general ledger. This unlikely occurrence would involve some type of obscure error occurring on the user’s session, and the user responding to the error incorrectly.

(Always call if something unexpected occurs during any type of back office posting!)

POST PAYROLL:

During this step the system will post a journal entry to the General ledger for all costs associated with the payroll. (Sales and A/R were posted during the Print Invoice option.)

UPDATE FILES:

This step will add dollars and hours from the merged time file to the employee QTD and YTD fields, the customers YTD hours and dollars fields, and the job order billed-to-date hours and dollars.

MERGE FILES:

A “paybill” record is created for each timecard. These get added to the “paybill” file. (The “paybill” file has been collecting these records since the very first payroll you processed on SkilMatch-it is never “cleaned out”.)

It is the “paybill” file that most reports pull from. (GP reports, Sales reports, workers comp reports, and more).

SAVE FILES:

Regardless of whether you save to tape or hard disk, you are making a copy of the timecards in the merged file. This save is INVALUABLE for recovering from the unexpected!

If you are using Cumulative billing, you will be asked whether to add the timecards to the cumulative billing file. IF YOU SAY NO, then you will be missing a set of timecards from your cumulative billing!

(If for some reason you have to save files again, be careful how you answer this question the second time around!)

BONUS FILE UPDATE:

Each Bonus type in your system either zeros at employee anniversary date (start date of first job paid on), or it zeros at year end (a manual process), or it never zeros.

During this update step, the system will zero any employee bonus record IF the bonus type says to, and if the employee’s anniversary date has occurred since the last weekending paid date. It gets zeroed regardless of whether the employee has a timecard in the merged file.

In the second part of this step, the system creates bonus records for any new employees being paid for the first time (if their job says they are eligible for bonuses), and adds to each employee bonus record the hours paid during this payroll (again if the job order says to).