I would like to add a deduction to payroll for certain employees that have signed up for a fitness program.

How do I do that? 

Hello E Redekopp,

To create the deduction go to Setup, Settings, Payroll and click on Deductions. Scroll through and find one of the generic, unused deductions (ie Deduction 8, Deduction 9 etc) and click on the name and rename the deduction to something appropriate for you.  Then in the Deduct By column indicate if you wish to deduct by Amount or Percent of Gross (probably a fixed amount in this case.)  Then indicate how to tax the deduction.  While still in the settings click on Linked Accounts and link a Liability account to the deduction.  Then exit the settings.

Open the employee record, click on the deductions tab and make sure you check mark to use this deduction for the employee.  Enter a default amount per period for the deduction and Save and Close.

Open the paycheque, click on the deductions tab, and you should now see a Fitness deduction for the amount of the default indicated in the employee record.  (The amount is only a default, you can modify it on the cheque if you wish.)

 Are you not able to set this up against a receivable?  If you paid for something on behalf of an employee, IE in this case a gym membership, then it is a receivable from the employee, and then when you deduct from the employee, it should reduce the receivable, this looks like it's doing it all backwards through the liability accounts?  

Hi there:  You can't link a deduction from an employees paycheque to the Accounts Receivable module.  Anything that pertains to the A/R module (Customers or Employees accounts) MUST BE DONE in the A/R module and cannot be facilitated any other way.  

Therefore, if you have set up the gym membership as an Account Receivable from the employee, in payroll you will have to link an account to have the deduction go to and then in the Sales window of the A/R module you will have to do an "invoice" to credit the A/R for the employee and debit that linked account.  It will act as a "clearing" account to put the other side of the entry to, both in payroll (the deduction) and in the A/R module (crediting the employee for the payment on account.) 

It is not advisable to do anything like this through the payroll module.  If it's not payroll, don't involve the transactions in the payroll module.  However, you can do it as described above.      Rita Deering

 OK, I wasn't looking to set it up directly against the A/R module, more to just post against a misc a/r account that did not go through the accounts receivable module.  But looks like it's not flexible enough to do that either.

Hi Tanya:  If you are not trying to set it up directly against the A/R module, then you can go ahead and link the deduction to any account you choose.  That is no problem at all.  Say, for instance, that when the company paid for the gym membership for the employee, the debit went to an account called Gym Memberships Receivable from Employees in the current asset section of your chart of accounts.   Then all you have to do in the payroll deduction tab is to link the deduction to that account and the receivable account will go down each time you deduct an amount from the employee until it is entirely taken care of.  The only thing with this solution is that if more than one employee is involved you will have to keep a worksheet as to which employees owe how much and how many payments have they made against what they owe.       Rita Deering

 Ok, so now the question is, when I go to pick an account to link, I am only getting starting at the liability accounts, it does not display the 1000 accounts which are the cash/receivable accounts,  only the 2000 and 5000, so is there some set up issue that is incorrect?  I am going to suspect that yes, for now, I am restricted to the payroll/payables/receivables module and perhaps that is why I can't see/access the balance sheet accounts?  (Might explain why I can't rename one of the blank deductions either)

Hi again:  I guess that was a poor suggestion of account to use because you can't link the Asset accounts in this way.   Pick an expense account to debit the payment of the gym memberships to (such as Miscellaneous expense or give it a name you prefer) and then link that account to the payroll deduction.  It will do the same thing as I suggested before.  Rita

Tanya:

When deducting a payment from an employee's payroll you should be setting the account to a Liability Account as you owe the money to someone to cover the reason for the deduction. If the vendor invoice is paid in full from the deductions then you would make the payment directly from the Liabilitiy Account. If the Company is paying a part of the amount due then the vendor's invoice would be split between the Liability Account for the employees' portion and an expense account for the employer's portion. Even the employer's portion can be setup in the payroll module to save extra entries. This should work exactly the same way the Receiver General gets paid for the statuatory deductions.

Clyde

 If a company pays for something on behalf of an employee, IE  a gym membership or computer purchase, what have you, most times, the company pays for it first and the employee makes payments on it, therefore it becomes a receivable from the employee as the odds are, the pay back from the employee will not coincide with the invoice/payment to the vendor/supplier.  It is not a case of setting it up as a liability because there are no deductions happening before the purchase of the service.  At each month end you are then able to see the true receivable balance from the employee as it is a receivable and so then belongs in your a/r receivables as it's cash coming in.  Then as the payments are deducted from the employee, the balance goes down to reflect that much less owing.What you get at the end of a month is a true account of all monies owing to the company.

Payrolls and Receivables do not mix. If you wish to handle this as a receivable then you must get a payment from the employee directly and not through a pay cheque.

If the deduction is made on the payroll and the amount is put to a liability account it will reconcile against what the company has already paid out from the liability account. I have done this with Benefits where the company pays the amount on the first of each month setting up a negative amount in the liability account. Then on each payday an amount is taken from each employee as pre arranged and applied to the liability account. On the last day of the month (or after the final payroll run for the month) the liability account can be reconciled and should be zero balance. The actual amount deducted from each employee can be verified using Reports/Payroll/Employee/detail and include the column for this deduction.

Clyde

Payrolls and Receivables do not mix. If you wish to handle this as a receivable then you must get a payment from the employee directly and not through a pay cheque.

If the deduction is made on the payroll and the amount is put to a liability account it will reconcile against what the company has already paid out from the liability account. I have done this with Benefits where the company pays the amount on the first of each month setting up a negative amount in the liability account. Then on each payday an amount is taken from each employee as pre arranged and applied to the liability account. On the last day of the month (or after the final payroll run for the month) the liability account can be reconciled and should be zero balance. The actual amount deducted from each employee can be verified using Reports/Payroll/Employee/detail and include the column for this deduction.

Clyde

Sorry for posting it twice.

Clyde

 It's ok, we won't hold it against you. ;) In this case, payroll and receivables don't mix, as this software does not allow it.  What you end up doing is posting a backwards liability until the deductions are done which is in my opinion, just that, backwards accounting, why would you want to show a backwards (aka debit) liability for a receivable?  Not something that makes sense but it's what we are stuck with when using Simply at the moment it seems.  Most software will allow you to debit a charge on behalf of an employee (vendor purchase) to a miscellaneous receivable account (ends up as a debit which is correct) and allow you to set up deductions to go against when they implement, (end up as a credit which reduces the receivable) then as mentioned, your receivables reflect 'all' your receivables, whether trade or employee or what not, not have funky items like debit liabilities to show your 'receivable'  just another limitation for me to make note of.