By Stephanie Elsen

You know the answer if you are responsible for payroll at your organization. An earning code represents the calculation used to calculate an employee’s pay, such as hourly, salaried, bonus, etc. A deduction code does the same for an employee’s deductions, such as 401K, wage garnishment, etc.

Most payroll software programs include a standard set of earning and deduction codes for you to choose from. If your needs become more complex than your payroll system can handle with the standard codes, be sure that your system includes the ability to customize the codes so you can calculate earnings and deductions correctly. If your system doesn’t allow you to customize the codes, you will need to figure out a way to do the calculations outside the payroll system, and enter them into the system by hand. This is inconvenient and inefficient.

A good example of this is a wage garnishment deduction. An employee’s garnishment calculation must be done correctly, and wage garnishments can vary greatly by employee. You need to ensure garnishments are calculated and deducted correctly from employee pay checks. If the system will not allow you to create the code to meet your needs, you will need to calculate it elsewhere and enter by hand.

CenterPoint Payroll Software has a set of standard earning and deduction codes available. And you can also customize as many codes as you need to, so you won’t have to be using spreadsheets or entering data by hand.