CenterPoint® Accounting for Agriculture - Understanding and Using Basic Payroll

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If you have fewer than three employees, have no regular deductions (health insurance, child support, etc.) and don't mind looking up tax amounts manually, you can use the Payments screen to pay employees. We refer to this as Basic Payroll Processing.

By following the basic payroll processes, CenterPoint Accounting can provide pay checks for a few employees, document the amounts needed for your 941/943 deposit, and generate W-2s.

Step A - One Time Setup:

Step B - Print Payroll Checks

Step C - Payroll Summary Report

Step D - Pay Payroll Taxes Due

Step A - One Time Setup

What accounts do you need for basic payroll entries?Setup Payroll Accounts

You will need a variety of accounts (Setup > Accounts > Accounts) setup specially for your payroll transactions. For some taxes, you will need both a liability and expense account because the tax is paid both by the employee (liability account) and the employee (expense account). The following is a list of the basic accounts that are required for basic payroll processing:

  • Labor Expense = Gross labor/wage amounts, which are an expense for your company.
  • Employee FICA Liability = The amounts deducted from your employee checks for their portion of FICA taxes.
  • Employer FICA Expense = FICA is also paid by the employer, this account is for the companies portion of FICA taxes.
  • Employee Medicare Liability = The amounts deducted from your employee checks for their portion of Medicare taxes.
  • Employer Medicare Expense = Medicare is also paid by the employer, this account is for the companies portion of Medicare taxes.
  • Federal Income Taxes Liability = The amounts deducted from your employee checks for federal income taxes.

If you have additional deductions that will be taken out of employee's checks, additional liability accounts will be needed for those amounts. A separate account should be created for each deduction so that the Payroll Summary Journal can be mapped appropriately. IMPORTANT: All employee tax (liability) accounts should be assigned to the Other Liabilities account category.

Refer to the "Using & Understanding Accounts" document for step-by-step instructions for adding accounts. Payroll tax liabilities accounts must be assigned a Category of Other Liabilities .

Map Payroll Accounts

The Payroll Summary Journal report is designed to provide you with the information necessary to complete your employee W-2 forms and determine the amount you owe in taxes for your 941 or 943 deposit. The liability and expense accounts setup for the basic payroll entries must be mapped to the lines of the Payroll Summary Journal. The accuracy of the report is dependent on the accuracy of the mapping of the payroll accounts and calculations for federal and state taxes.

  1. In the Setup menu, point to Payroll Details, and then click Map Payroll Accounts.

  1. Select the first item in the Payroll Journal Report Lines (for example, Federal Withholding).
Note: Do not map anything to either the Employer's Portion of Medicare or Employer's Portion of Social Security, these will calculate automatically for you on the report.
  1. On the right, verify that the correct Line Type is assigned.
  2. In the Account field, select the account that will be used for that expense or deduction. Then click Add Account. The account will display in the Mapped Accounts box.
Note: To remove an account from the report line, under Payroll Journal Report Lines, select the report line you want to remove an account from, under Account, click Remove Account.
  1. Repeat steps 2-4 for each item displayed in the Payroll Journal Report Lines box.
Note: Do not map anything to either the Employer's Portion of Medicare or Employer's Portion of Social Security, these will calculate automatically for you on the report. You will need to set up an entry for at least the following (you should map all accounts you use for payroll payment transactions):
  • Labor
  • Medicare
  • Social Security (FICA)
  • Federal Withholding
  1. If you have additional accounts you use for payroll payment transactions, for example state withholding, health insurance, etc. they must be mapped also. To do so, we will add rows to the Payroll Journal Report Lines.
  2. Click the New button on the left side of the screen to add a new line in the Payroll Journal Report Line Detail box.
  3. Specify an appropriate Line Title and Line Type on the right.
  4. In the Account field, select the account that will be used for that expense or deduction. Then click Add Account. The account will display in the Mapped Accounts box.
  5. Click Save.

Employee Setup

Each employee must be setup in Setup > Names > Names and have both the Vendor and Employee Name Type selected on the record.

Note: A pay stub with year-to-date information will not print with the mapped payroll accounts unless you have a name marked as both Vendor and Employee.

Refer to the "Names (Vendors, Customers, Employees, or Salespersons" document for step-by-step instructions for adding employees.

Create Recurring Entries for the Payroll Checks

A recurring payment transaction is used to generate the employee's check and record payroll taxes owed. By setting up a recurring transaction for the payroll check, you can simply enter the amount of their gross pay and it will calculate everything else for you. This setup step is designed to simply create the recurring entry that will be used in the future when a payroll check is used - no check will be printed.

  1. Select Processes > Purchases > Payments.
  2. Select your first employee in the Pay To The Order of Field.

  1. In the grid at the bottom of the screen, include a line for each account that will be used when processing this employee's payroll check. For this step, leave the Amount fields at zero.
  2. Select the Recurring button.

  1. For the labor expense line, the Calculation Type should be Percent. The Value should be 100%.
  2. Select the first deduction listed (for example, Employee FICA Payable, Employee Medicare Payable, etc.), then specify the Calculation Type (Amount or Percent) and the Value. The value should always be entered as a negative as this amount or percentage will be deducted from their gross wages. Repeat this step for each deduction listed.
  3. Place a check mark in the Set as Default and Set to automatically load default recurring transaction fields.
  4. Click Save. At the This recurring transaction does not total to 100% do you still want to continue and save this recurring transaction? message, click Yes.
  5. Because this entry was created to merely setup the recurring entry (and not print a check), click Clear on the main Payments screen.
  6. Repeat steps 1-9 for each employee.

Step B - Print Payroll Checks

Recurring Payment transactions are used to print payroll checks. Because a recurring entry was already created for the employees, checks can quickly and easily be printed by simply entering the employee and their gross payroll amount in the transaction.

  1. Select Processes > Purchases > Payments.
  2. Choose the appropriate Bank Account.
  3. Select your first employee in the Pay To The Order of Field. Because we previously created a recurring entry for this employee and marked it to load automatically, the lines in the grid will fill in automatically.
  4. Select the appropriate check Date.
  5. In the Amount field below the date, enter the amount of the employee's gross pay. The account lines in the grid will automatically compute.
  6. The Total field at the bottom of the screen will display the employee's net payroll check amount. Press the Adjust Amount field to copy this amount to the Amount field at the top of the check form.
  7. Click the Print button. (An image of a printer displays on the button. A green check mark means the order will be printed and a red X means the order will not be printed.) To set your default for the Print button, right-click on the button and select Set As Default. To override the Print button default, click the Print button and change the settings on the Print Settings screen..
Note: If you want to attach a document to this transaction, see the Attach Documents to Transactions topic for detailed information.
  1. Click Save to print the check and save the entry.
  2. Repeat steps 3 - 8 for each employee check needed.

Step C - Payroll Summary Report

The Payroll Summary Journal will report the payroll information generated when the employee checks were printed. At the end of the report, it will also provide you with the tax information used to complete your 941/943 tax forms and pay your taxes due.

Select Reports > Reports > Payroll > Payroll Activity > Payroll Summary Journal to print the report.

Step D - Pay Payroll Taxes Due

A payment transaction is used to pay the amounts withheld from the employee's checks and the employer's portion. The amounts used on the payment transaction will be found on the Payroll Summary Journal. The payment example below uses the numbers from the above Payroll Summary Journal.

Note: The Medicare and Social Security Taxes need to be split between accounts; 1/2 the amount will go to the employee taxes payable account (for example, Employee FICA Payable) and the other 1/2 will go to the employer's expense account (for example, Employer FICA Tax Expense).
  1. Print a Payroll Summary Journal for the appropriate tax period.
  2. Select Processes > Purchases > Payments.

EXAMPLE:  Using the information from the Payroll Summary Journal displayed above. CenterPoint Farms will pay with their Federal Taxes.

  1. Select the appropriate Bank Account and Pay To The Order Of.
  2. If a check will be printed, verify the appropriate Check Number. Note: if the taxes were paid electronically and you have a sequence setup for electronic payments, select that in the Check Number field.
  3. In the first line of the grid, select the Employee FICA payable Account. The Amount will normally be from the FICA Withholding line in the Report Totals Section (if you pay quarterly, choose the amount from the quarter column).
  4. In the next line, select the Employer FICA expense Account. The Amount will be the difference between the FICA Withholding line in the Worksheet Information for 941 & 943 section and the amount in line 4.
  5. In the third and fourth line of the grid, repeat steps 4 and 5 for Employee Medicare Withholding Payable and Employer Medicare Expense.
  6. Federal Income tax is paid only by the employee (the amount is deducted from their check). On the fifth line, specify the Federal Income Tax Payable Account. The Amount will be the Federal Withholding line in the Worksheet Information for 941 & 943 section.
  7. If a check is needed, select the Print this check? box, otherwise leave it blank to record a payment that was made electronically or by handwritten check.
  8. Click Save.
  9. If additional taxes (for example, State Taxes) need to be paid also, create additional Payment transactions as needed.

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