Business user guide

[James Leone]

I haven't had enough time to "audit" the details, but at first glance 
and from a US Certified Public Accountant's point of view,

....this is a very good list to start with....

Thank you Herman. :-)

James Leone

henryhartley at westat.com wrote:

>     -----Original Message-----
>     From: herman [mailto:herman at aerospacesoftware.com]
>     Sent: Tuesday, May 20, 2003 11:39 AM
>      
>      The traditional reason for having a 'Payroll Module' is to get
>     user lock in.  Commercial accounting software companies require
>     that the users buy periodic updates of the tax tables and since
>     the government can never leave the tables alone, that produces a
>     good stream of revenue.  Of course, they typically also require
>     the users to buy updates even when nothing at all changed, but
>     that is another story. Since the CCRA provides the dinky little
>     Windows Tables on Disk program, much of the need for small
>     businesses to use a payroll service is eliminated, but that is not
>     true for other countries.
>
>     Somehow one needs to:
>     a. Compute the deductions based on rules/tables provided by the
>     tax agency for each employee
>     b. Print pay slips
>     c. Print pay cheques
>     d. Record the salaries & wages and payroll taxes for all employees
>     e. Record employee leave
>     f. Print a single payroll tax cheque to settle the account with
>     the tax agency
>     g. Print a consolidated Payroll report as an audit trail
>     h. Print a Record of Employment when an employee gets laid off,
>     for Employment Insurance / Social Security / Maternity Leave /
>     Medical Leave purposes
>     i. Compute Holiday Pay, Termination Pay, Pay in Lieu of Notice and
>     other lay-off related pay - nice to have stuff - not essential
>
> Let me start by saying I'm pretty much new to GNUCash so I really have 
> no idea of what it can and cannot do.  I've used everything from Quick 
> Books for a small business with no payroll to CostPoint for a nearly 
> $300 million a year company.
>  
> Some of those sound simpler than they actually might be.  For 
> instance, f. Print a single payroll tax cheque to settle the account 
> with the tax agency is really f. Print consolidated payroll tax 
> cheques to each tax agency.  There are (at least in the USA) multiple 
> things that have to be computed based on pay, not all of which are 
> payroll deductions.  Although most small businesses won't have all of 
> these, anyone with a payroll will have most of them:
>  
> FICA (Social Security) and Medicare (deduction)
> Payroll tax (That same amount again but as an expense to the employer)
> 401K contricutions (deduction - pre-tax and/or expense)
> Cafeteria plan contributions (deduction - pre-tax)
> Federal Income Tax withholding (deduction)
> State Income Tax withholding (deduction)
> Local Taxes (some jurisdictions)(deduction)
> Workers' Compensation (expense)
> Federal Unemployment Tax (expense)
> State Unemployment Tax (expense)
> Reimbursements for additional health care, etc. costs (deduction)
> Garnishments
>  
> I'm sure I'm forgetting some.  Then, payments have to be made (some 
> monthly, some quarterly) to pay the Feds the FICA/Payroll Tax/Income 
> Tax Withholding amounts, the state (or states in some cases) for their 
> withholding, the Feds for Unemployment, the State (and even more 
> likely states) for Unemployment and again for Workers' Comp.  Any 
> amounts for 401K, Cafeteria plans, health care, etc. have to be paid, 
> also.
>  
> At the end of the year (or the beginning of the next) you will need to 
> generate the numbers for the annual reporting burden.  You'll also 
> want to print W-2s and W-3s, etc.
>  
> Additionally, leave accrual is sometimes based on hours worked.  You 
> have to deal with paying time and a half for overtime, etc.
>  
> Payroll isn't simple but it isn't rocket science, either.  It's just 
> that there is a long list of possible calculations that need to be 
> made.  The order of the deductions is important for some (i.e. 401K 
> deductions come out before tax withholdings).  Naturally every state 
> in the US has a different set of tables.  They are a matter of public 
> record so keeping them up to date isn't really as hard or costly as it 
> sounds.  It's true, however, that accounting software companies make 
> their systems complicated enough that users are encouraged to use 
> their update service.  These services often leave a great deal to be 
> desired.
>  
> Okay, a large company with thousands (or probably even dozens) of 
> employees isn't going to be using GNU Cash as their accounting 
> system.  Still, many of these things need to be handled even if you 
> only have one employee.  I'd say that the bare minimum would be 
> FICA/Medicare/Payroll Tax, Federal and State Income Tax withholdings, 
> and Workers' Comp/Fed and State Unemployment calculations.  Being able 
> to have employees in more than one state would certainly be useful in 
> many areas (many companies in our area have employees in Maryland, 
> Virginia, DC, and/or West Virginia).
>  
> -- 
> Henry Hartley
>
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