Platform - Payroll

Introduction

The Successware Payroll Manager allows you to maintain and post timecard entries, other earnings, and employer expenses.  Once employee wages have been paid, you will use the reconcile feature to balance your actual payroll to the original gross wages by recording net wages, deductions and additional expenses. Successware will generate and post journal entries to reflect these totals.

Earnings are entered as timecard entries or as miscellaneous wages.  You will prepare, verify, and post them in the Payroll Manager. 

• If you are using the interface with QuickBooks Pro, you will export gross wage information from Successware into QuickBooks. QuickBooks will calculate the net wages and generate checks for your employees. You can then import the reconciliation information back into the Successware Payroll Manager.
• If you are using an outside payroll service or other third party software to calculate taxes and generate checks, you will obtain reports from the other source and use the information to manually enter the reconciliation information in Successware.

After the reconciliation information has been imported or manually entered, you will post the reconciliation that will update the General Ledger with the actual payroll entries.

Accounting Flow

Earnings

All earnings are entered using Pay Items/Premiums. You will add pay items while setting up Payroll.  A pay item consists of a code and description and also determines the pay type (hourly, salary, piece rate or commission), whether the earnings are job related or not, whether the earnings should factor into overtime calculations, and where the earnings expense should post in the general ledger. 

Sample Pay Items

The expense type you have selected for the pay item defines the general ledger account.  You will set up an expense type for every general ledger account you wish to affect with gross pay.  You will have some expense types for direct costs (above the line) and others for operating expenses (below the line). The department will default to the job’s department for job related transactions.  You will select the desired department for non job-related transactions.

Whether you are entering earnings in the timecard manager or as miscellaneous wages, or the earnings are generated automatically for salaried employees, it is the pay item that will determine where to post in general ledger.

How is the Pay Item Assigned?

When entering miscellaneous wages you will select which pay item to use for each line item. 

Salaried earnings are set up on each salaried employee. 

Timecard entries are automated.  When setting up payroll you will select an hourly pay item to use as the Standard Labor (default) pay item.  You will select the pay item that will be used most often for hourly timecard entries.  When you complete call progress the system creates timecard entries for “dispatched”, the time segment from dispatched to onsite, and “onsite”, the time segment between on-site and completed.  When the entry is created, the system will look at payroll setup to determine what the pay item should be.

What if you want to use a different pay item for some jobs? 

You can select a pay item for each job/call type.  If a job/call type includes a pay item, that pay item will be used rather than the standard labor pay item.  Open the job/call type reference library to add pay items to the job/call types that you wish to post differently.  You DO NOT need to select a pay item for job/call types that should post to the standard labor (default) pay item.

Is there any other way to use a different pay item for hourly timecard entries? 

Yes.  A pay item assigned to a timecard status code will override the job/call type pay item.  For instance, if you want to charge travel time to a different account, you can change the timecard status code of “dispatched” to use a pay item for travel time.  Just remember that ALL “dispatched” timecard items will post based on that pay item.

To Review:

Timecard Entries

Job Related timecard entries look at the timecard status for a pay item.  If there is no pay item, the system will look at the job/call type to see if there is a pay item there.  If not, the system will look at payroll setup to find the standard labor pay item.

Non-job related timecard entries look at the timecard status for a pay item.  If there is no pay item, the system will look at payroll setup to find the standard labor pay item.

Miscellaneous Wages

When entering miscellaneous wages you will select the desired pay item for each entry.

Salaried Earnings

You have two options for expensing salaries when setting up salaried employees.  You can expense salaries using timecard entries or salary splits.

You can use timecard entries to determine where to post earnings on employees for whom you schedule and track call progress through the call center but pay a salary.  As you dispatch and enter on-site and completed times for jobs, the system creates timecard entries whether the employee is paid based on timecard entries or not.  You can take advantage of that feature to split a salaried employee’s earnings.  For instance, if 20% of his timecard entries are for direct cost and department 21, 20% of his salary will post to direct cost and department 21.  Using timecard entries to determine the split will ensure that the employee’s earnings are always split based on where he or she worked.  This method is NOT recommended for employees that have very little timecard activity.  For instance, if you have a manager that spends most of his time in the office but maybe spent 8 hours at a jobsite, you would not want his entire salary to be split based on those 8 hours.

Using Salary splits allows you to predetermine where the employee’s salary will post every pay period.  You can use any combination of pay items and departments to split the salary by percentage.  For instance, you may want all earnings to post to the same pay item but split them departmentally. You may split the salary by pay item.

When posting the gross payroll expense from earnings, the system will offset the entries with Accrued Payroll.  You will select the liability account to use for accrued payroll when you set up general ledger default accounts.

Deductions and Other Employer Expenses

You will determine where deductions and other employer expenses will post when setting up payroll.

When setting up the GL tab of payroll setup, you will list all deductions and other expenses and indicate whether they are deductions, expenses, or both.  For instance FICA (Social Security) is both deducted from each employee’s paycheck and an expense to the employer.  You will also enter the general ledger account or accounts you wish to affect when the payroll reconciliation is posted.

For employer expenses, you will enter both the liability account that you will use to accrue the expense and the actual expense.  There are fields for sub accounts when using accounts for which there are sub accounts.

Sample Deductions & Employer Expenses

If you are using sub accounts you must enter a deduction or expense for each sub account.  The EmpeAcct (Employee Account) is the same but the appropriate sub accounts have been entered in the next field.

Deductions may post to a liability account as an accrual.  However, in some cases, you may wish to reduce an expense with the deduction (such as employee reimbursement for expenses or employee portion of uniforms or insurance.) 

Deductions and Expenses that your company is responsible for administering are considered to be Employer Managed.  That column is provided for companies using a payroll service to indicate which items they are responsible for and which ones are handled by their payroll service.  If you are using the interface to QuickBooks Pro, all items will be Employer Managed. 

Deductions that are not Employer Managed will not update the General Ledger when the reconciliation is posted.  An example of a deduction that is typically not employer managed is Federal Withholding.  Since the payroll service withholds the deduction and reports it to the IRS, it never accrues nor has to be paid out of your general ledger.

Employer Expenses that are not Employer Managed will update the General Ledger expense account only.  The Employee and Employer liability accounts will not be updated.  An example of an expense that is typically not employer managed is the employer’s portion of FICA and Medicare.  Since the payroll service withholds the deduction, accrues the employer’s portion, and reports it to the IRS, it never accrues nor has to be paid out of your general ledger.  The expense for the employer’s portion will be posted.

Checks/Disbursements

The system uses information in the Payroll Checks or Disbursements tab of the payroll reconciliation to determine how to post net pay.

• If you are using the QuickBooks Pro interface, you will import the net checks and actual deductions and expenses to post in Successware.
• If you are creating paychecks in a different software package, you will manually enter net checks and actual deductions and expenses.
• If you are using an outside payroll service, you will manually enter the disbursements, as they will appear on your bank statement, and the actual deductions and expenses.

The deductions and expenses will post as described in the previous section.  Checks or disbursements will post to the general ledger account and register account that is selected when you post the reconciliation.

When setting up payroll you will select a register account and mark it as “default payroll account”.  That register will display as the Payroll Bank Account in payroll reconciliation.  You can select a different account if necessary.

The system will offset the reconciling entries with accrued payroll (zeroing out the account.)

Payroll Setup

To setup your payroll, from the Main Menu, select Setup and click Payroll Setup.

Once you access the Payroll Setup page, you can use the numbered tabs to breakdown each payroll setup option.

1. Payroll Periods Tab

Indicate the type of payroll periods your company uses. You may use any combination: weekly, biweekly, monthly and semimonthly.

This is where you indicate whether or not you're using an outside payroll service to process your payroll. If you are using a payroll service, select how the payment to the service should be processed.

2. G/L (General Ledger) Tab

The Pay Items table consists of a Code, Description and an Expense Type. The Expense Type will determine to which account the labor expenses for the Pay Item will post in the General Ledger.

The Standard Labor Pay Item will be used as the default pay item on timecard entries when no other pay item is specified. This standard labor item must be an ‘hourly’ item.

Deductions and Additional Employer Expenses consist of a Description and three General Ledger account and/or sub account combinations. Use these items to define payroll deductions, employer accruals, and expenses such as income tax, unemployment taxes, 401k, group insurance, etc.

The P/R Service Disbursement Setup option is used to create a list of the disbursements necessary to process your payroll when using a payroll service.

3. Overtime Tab

In order to use automatic calculation of overtime, you must define how Successware should calculate overtime.

The Modify Setup button allows you to specify whether overtime pay rates and double time pay should be automatically awarded after a certain number of hours.

4. NTCs and Premiums Tab

The NTCs & Premiums tab of Payroll Setup is where you will define how you wish to treat NTC entries.

NTC entries represent times when there are no timecard entries on an employee’s timecard. When a gap exists between two entries, the system will automatically create an NTC entry to fill the gap.

5. Labor Burden Tab

Labor burden is the additional employer expense of payroll such as unemployment tax, employer paid health insurance, employer 401k contributions, etc. This does not include paycheck deductions or withholdings.

Each time you process a payroll period, the percent of labor burden will change slightly based upon the actual gross wages earned. By “estimating” the percentage of labor burden you can post this additional expense at the time of posting payroll, rather than waiting until you reconcile.

This estimated figure will show on daily financial statements giving you a more accurate profit margin. You may choose to post payroll with or without the estimated labor burden, or ELB.

6. Import Export Tab

The Import/Export tab is used to define:

• An Export Model if you are processing Payroll through QuickBooks Pro.
• The location of the folder Successware should use when importing or exporting payroll information.
• The specific reconciliation information you plan to import.

If you import disbursements from your other software, you will select the type of information you will import. This includes Checks, Deductions, and/or Expenses. In order to set up import filters, you must have a sample text file from the payroll software or wait until you have created the first import file after processing payroll.

7. Miscellaneous Tab

The Miscellaneous tab is only used for companies that are in states that impose local payroll taxes bases on where the work is performed in combination with the employees' place of residence.

Payroll Manager

The Payroll Manager is where you will prepare, review, post, and reconcile payroll periods. In addition, the Payroll Manager gives you access to previous payroll periods for review purposes.

To access the Payroll Manager, open the Main Menu, select Payroll, and click on Payroll Manager.

The Payroll Manager has 3 modes: Payroll Periods, Period Review and Employee Detail. The Employee Detail page is only accessible from the Period Review screen.

Creating Payroll Periods

You must create payroll periods prior to preparing and processing them. Periods will be created based upon the period types you have selected to use in your Payroll Setup.

From the Payroll Manager, select Create Period.

Select the periods you wish to create and click Save. To delete a period, select the appropriate period in the grid and select Delete from the ellipsis.

Preparing a Payroll Period

Prior to processing a payroll period, the period must be prepared.

Preparing a period will populate the period if it's not yet populated and summarize the employee wages.

To prepare a payroll period, use the ellipsis on a period and select Prepare.

Period Review

The Period Review summarizes each employee’s earnings in the top section. The bottom section shows the detailed information for the selected employee. Use this information to ensure that each employee’s earnings, hours, overtime and unreleased wages are correct.

Employee Detail

The Employee Detail lists all timecard entries for the selected employee for the date range covered by the selected period. This is where Pay Rate adjustments and Miscellaneous Wage can be added and edited.

The Employee Detail screen has two tabs, Timecard Entries, and Wages.  In the Timecard Entries tab, you can edit the timecard entries as needed. Using the ellipsis, you can also specify if the entry should utilize RegOT (Regular hours plus overtime), or AvgRegRate (The average of the employee's rate).

Rather than using the employee's regular rate, Successware can take an average of the employee's rate which would include all pay items, such as commissions, in determining what the employee is paid on average. If you're not sure whether you should use the AvgRegRate option and a calculated average rate for your employees, check with your state's labor board for more information.

In the Wages tab of the Employee Details screen, you can add or edit wages for the employee in that payroll period. When adding wages, you can also specify if the RegOT or AvgRegRate calculation is used.

Calculating Overtime

Calculating Overtime can be specified for an employee on both the timecard and/or in miscellaneous wages. Overtime can be manually entered or calculated automatically based upon the payroll setup.

The Calculate Overtime button can be found in the Period Review tab.

Any overtime for the timecards in overtime weeks included in the pay period will be calculated and included in the OT (overtime) column.

Verifying Wages

When you have reviewed the timecard entries and miscellaneous wages and everything appears in order, you must “verify” the employees' wages. All employees must be verified before the period can be posted.

1. Click the ellipsis for the employee you are verifying and select Employee Details.
2. Confirm you want to lock payroll records by selecting Yes.
3. Review employee details and select the Verify button.

Posting the Period

Once all employees have been verified, the payroll period can be posted. Posting the period makes all of the appropriate entries in the General Ledger related to the Payroll Period.

Click the ellipsis for the Payroll Period and select Post.

Estimated Labor Burden

What is Estimated Labor Burden and why would I want to post it with payroll?

Labor Burden is the additional expense you incur simply because you have employees.  It includes employee benefits, taxes (the employer portion), insurance, etc. 

You can use historical payroll reports to calculate what percentage of your overall payroll is the additional expense.  The following sample payroll report is an example:

In this example the employer has incurred 8,858.60 in gross pay.  That is what he is paying his employees for salary and commissions they have earned.  But, he has also incurred an expense of 1,052.52 for taxes and other contributions.  So his total payroll expense is 9,911.12 – about 12% more than his gross. 

Successware can include the additional 12% as an Estimated Labor Burden when posting your initial payroll expense.  When you reconcile payroll with your actual numbers, the estimated labor burden will reverse and actual numbers will post.

There are a couple of reasons why you may wish to have this estimated burden post:

1. Expenses will be more accurate on financial reports prior to reconciling payroll.
2. Using Estimated Labor Burden will departmentalize the expense.

When setting up Payroll, you will have 3 options for posting estimated labor burden:

• Not to post an estimated labor burden.
• To post an estimated labor burden to a default labor burden expense account.
• To post an estimated labor burden as indicated by the (associated) timecard entry’s pay item.

Sample Accounting Flow for Estimated Labor Burden Options

In this example the total earnings for both monthly, salaried employees is $3,333.36 in salary and $5,525.24 in commissions.  The initial payroll posting will post the actual earnings to the appropriate expense account as defined on the pay item’s expense type.  This will be offset with Accrued Payroll.  The entries will use the timecard date for timecard entries, or the ‘released’ date for miscellaneous wage entries, as the post date.

When Payroll is reconciled the amount credited to Accrued Payroll will be debited.  Balancing entries will be made in the accounts defined for listed deductions and additional expenses as determined in Payroll setup.

For all entries posted during reconciliation use the Check Date as the posting date.

Method 1 – Posting payroll without an Estimated Labor Burden

Original Posting

Account/department	Debit	Credit
2101 – Accrued Payroll		8,858.60
4650-21 – Cost of Sale Commissions	5,525.24
6000-21 – Salesperson Wages	3,333.36
	8,858.60	8,858.60

Reconciliation Posting

Account/department	Debit	Credit
2101 – Accrued Payroll	8,858.60
1004 – Checking Payroll		6,442.92
2201 – FICA & Medicare Withheld		677.68
2202 – Federal Withholding		1,546.00
2205 – FICA & Medicare Employer		677.68
2206 – State Unemployment		77.91
2207 – Federal Unemployment		31.17
2311 – 401(k) Contribution		265.76
2312 – 401(k) Withheld		125.00
6400-00 – FICA & Medicare Expense	677.68
6420-00 – Payroll Taxes Other	109.08
6520-00 – Group Medical Reimbursement		67.00
6540-00 – 401(k) Expense	265.76
	9,911.12	9,911.12

Method 2 – Post an Estimated Labor Burden to the default Estimated Labor Burden account as defined in General Ledger setup.

Original Posting

Account/department	Debit	Credit
2101 – Accrued Payroll		10,098.87
4650-21 – Cost of Sale Commissions	5,525.24
6000-21 – Salesperson Wages	3,333.36
6510-21 – Estimated Labor Burden	1,240.27
	10,098.87	10,098.87

Reconciliation Posting

Account/department	Debit	Credit
2101 – Accrued Payroll	10,098.80
1004 – Checking Payroll		6,442.92
2201 – FICA & Medicare Withheld		677.68
2202 – Federal Withholding		1,546.00
2205 – FICA & Medicare Employer		677.68
2206 – State Unemployment		77.91
2207 – Federal Unemployment		31.17
2311 – 401(k) Contribution		265.76
2312 – 401(k) Withheld		125.00
6400-00 – FICA & Medicare Expense	677.68
6420-00 – Payroll Taxes Other	109.08
6510-00 – Estimated Labor Burden		1,240.20
6520-00 – Group Medical Reimbursement		67.00
6540-00 – 401(k) Expense	265.76
	11,151.32	11,151.32

The original posting applied the estimated labor burden to the default estimated labor burden account (6510) and the same department to which the earnings were posted.

The system credits the estimated labor burden from the default estimated labor burden account (6510) and department 00 and posts the actual payroll expenses when it is reconciled.

Method 3 – With an Estimated Labor Burden as indicated by the timecard Pay Items (Labor burden is added directly to each payroll item, including the item’s department number.)

Original Posting

Account/department	Debit	Credit
2101 – Accrued Payroll		10,098.87
4650-21 – Cost of Sale Commissions	6,298.77
6000-21 – Salesperson Wages	3,800.10
	10,098.87	10,098.87

Reconciliation Posting

Account/department	Debit	Credit
2101 – Accrued Payroll	10,098.80
1004 – Checking Payroll		6,442.92
2201 – FICA & Medicare Withheld		677.68
2202 – Federal Withholding		1,546.00
2205 – FICA & Medicare Employer		677.68
2206 – State Unemployment		77.91
2207 – Federal Unemployment		31.17
2311 – 401(k) Contribution		265.76
2312 – 401(k) Withheld		125.00
4610-00 – Burden Applied		1,240.20
6400-00 – FICA & Medicare Expense	677.68
6420-00 – Payroll Taxes Other	109.08
6520-00 – Group Medical Reimbursement		67.00
6540-00– 401(k) Expense	265.76
	11,151.32	11,151.32

The original posting applied the estimated labor burden to the same expense and department to which the earning was posted.

Reconciling left that estimated amount in the expense and department but reversed the original estimated amount using a burden-applied account.  The net result is that the labor burden (albeit an estimate) will appear on financials with the labor.  Since there is an offsetting entry to 4610 the bottom line remains the same.

Overtime

You can select to calculate overtime automatically or enter it manually. 

Automatic Overtime can be configured to calculate daily or weekly for hourly employees.  It is applied to timecard entries only.

Manual Overtime can be entered for any employee.  It can be entered as a premium code on timecard entries or miscellaneous wage entries.

Whether you select to use Automatic or Manual overtime, the system will refer to the ‘RegOT’ column on pay items to determine which pay items should factor into number of hours and/or pay rate to use for overtime calculations.

Overtime is calculated based on several options that you will configure when setting up Payroll.

• The Automatic Overtime option in the Employee form – selected on employees for whom you wish to automatically calculate overtime.
• The Pay Items that have been marked as “RegOT”
• Overtime Setup – can choose to accumulate daily or weekly or both.
• Payroll Premium Setup – can choose to calculate the base and premium based on the employee’s standard hourly rate, “normal” rate of the pay item, or a calculated average rate for each payroll period.

Regular Pay

Regular pay and hours represent the type of earnings an employee will typically earn throughout the year.  Those earnings should be taken into consideration when calculating overtime.

Pay Items such as Vacation or Holiday are not usually considered regular pay.  For instance, suppose an employee has 42 hours on his timecard and you pay overtime on hours over 40.  However, 8 of those hours were vacation hours so he really only worked 34 hours.  Would you pay him 2 hours of overtime?  If not, the vacation pay item should not be marked RegOT.  Then the system will calculate that he has 34 ‘regular’ hours for the week and automatic overtime will not add 2 hours overtime.

You will determine if earnings such as Commissions or Bonuses should factor into the rate for premium calculation.  Since commissions and bonuses are not hourly pay items they will not affect the number of hours the employee has for the week.  However, when the system calculates the average rate for the payroll period it may consider those earnings as part of the employee’s regular earnings.  The system will divide regular earnings by regular hours to determine the pay period’s average pay rate.

Number of Hours

Overtime is always paid as hourly pay within Successware.

When using Automatic Overtime for your employees, the system will automatically calculate how many hours each employee has earned for the pay period based on the number of hours on his or her timecard that were entered using a pay item that is marked RegOT and how you configured Overtime Setup when setting up payroll.

You can select to calculate overtime on a weekly basis or a daily basis.  You will also enter the number of hours after which you consider overtime (i.e. 40 hours for the week or 8 hours for a day.)

You can also select both.  The system would calculate daily overtime first, then weekly overtime.

Example:

The sample employee has 44.25 regular hours for the weekly payroll period.  It is broken down by day as follows:

Day of Week	# of hours	OT hrs/day
Monday	11	3
Tuesday	9.25	1.25
Wednesday	8.5	.5
Thursday	9.5	1.5
Friday	6	0
Total Hrs.	44.25	6.25

If you calculated the employee’s overtime on a weekly basis after 40 hours, he would receive 4.25 hours in overtime pay.

If you calculated the employee’s overtime on a daily basis after 8 hours, he would receive 6.25 hours in overtime pay.

If you selected to calculate the employee’s overtime on both, he would receive 6.25 hours in overtime pay because the system is calculating daily first, then weekly.

So what advantage is there to using both?  Why not just use daily?

The advantage to using both daily and weekly overtime would be when the employee does not have over 8 hours on any day, but worked over 40 hours for the week.  For instance, the employee worked 8 hours every day Monday through Friday, then worked 4.5 hours on Saturday.  If you were only using the daily calculation, he would not receive any overtime pay even though he worked 44.5 hours for the week.

Premium Rate

Once you, or the system, have determined the number of hours that should be considered overtime, the system will calculate the premium rate of pay based on the following formula:

Premium Rate = Base Rate + Premium Addition

You have 3 options to select the Base Rate.  By:

• Normal rate for work performed (Recommended)
• Employee’s calculated average (regular) rate for the given period
• Standard hourly rating from Employee Setup (if higher than regular rate)

You have 2 options to select the Premium Addition.  By:

• Employee’s calculated average (regular) rate for the given period (Recommended)
• Standard hourly rating from Employee Setup (if higher than regular rate)

Therefore, you have 5 different combinations you can select to calculate the correct premium calculation for your employees:

• Normal base + calculated average premium addition
• Normal base + standard hourly rate for premium addition
• Calculated average base + calculated average premium addition
• Calculated average base + standard hourly rate for premium addition
• Standard hourly rate base + standard hourly rate for premium addition

The system calculates the “average” hourly rate based on total regular earnings.  It does so to ensure employees with no, or varying, hourly rates are paid a fair wage.  The average rate is calculated by dividing the regular earnings by regular hours for the payroll period.

You may select to use “Employee’s standard hourly rating in employee setup” for the base and/or the premium addition.  However, if the system calculates an average rate that is higher than the employee’s standard hourly rate, it will use the average anyway.  If that situation occurs, the system will display a message indicating that there are employees in the pay period whose calculated rate is higher than the employee’s standard rate.  It will allow you to display a list of the affected employees.

You must understand how rates are calculated for the different types of employees in order to determine how you wish to set up employees and how you wish to enter their overtime, if any.

Some examples of rate calculation follow:

Rate calculation and overtime for Salaried Employees

Example 1 – Salaried employee with salary expensed using timecard entries

The sample employee is set up to be paid a salary of $1,000.00 each week.  How that salary is split by date, GL account, and departmentally will be determined by his timecard entries.

When entering payroll information for Pete, we indicated that his annual salary would be $52,000.00, which is $1,000.00 per week.  We also indicated that his ‘average’ hours per pay period would be 40 so the system calculated an hourly rate of $25.00.

For our sample payroll period, Pete had 46.5 hours on his timecard; one hour for pay item TECH and department 10, 7.5 hours for pay item TECH and department 20 and 38 hours of SHOP time.

Notice that his earnings are $1,000.01 and were calculated with a rate of $21.5054.  Here’s why:

The system will calculate his rate each pay period by dividing $1,000.00 by the number of regular hours on the employee’s timecard.  In this case the employee has 46.5 hours on his timecard so the calculation is 1,000.00/46.5 = 21.50537634 and is rounded to 21.5054.  That is the calculated average (regular) rate for the employee this pay period.

If you add the total earnings from the wage summary in the example above you will notice that the 3 calculated earnings do total $1,000.01 because of rounding.

If you apply an overtime premium to a one-hour timecard entry the system will calculate the overtime rate as described below. 

Payroll Setup Base/Premium	Base Rate	Premium Addition	OT Rate
Normal/Calculated	21.5054	10.7527 (1/2 of 21.5054)	32.2581
Normal/Standard	21.5054	12.50	34.0054
Calculated/Calculated	21.5054	10.7527	32.2581
Calculated/Standard	21.5054	12.50	34.0054
Standard/Standard	25.00	12.50	37.50

Example 2 – Salaried employee with salary expensed using salary splits

The sample employee is set up to be paid a salary of $1,000.00 each week.  How that salary is split by GL account, and departmentally will be determined by percentage splits defined in employee setup.

How the employee’s salary earnings will post by date is determined by the employee’s schedule and the number of hours in the pay period.  For instance, the sample employee’s schedule is Monday through Saturday and there are 40 hours in the employee’s payroll period so the system will post 6.75 hours each for those 6 days.

Any additional hours entered in Miscellaneous Wages will post on the item’s date to the general ledger account indicated on the pay item.  If the Pay Item is marked IsRegOT, the hours will be added to the standard hours from the employee’s setup when calculating the average rate for the period.

You will notice that, when using Salary Splits, the system maintains a rate that is approximately 25.00 per hour.  You will see a variance plus or minus by a penny or two for rounding. 

However, if you have other regular earnings, such as Commissions, the calculated rate will be affected.  For instance, if this employee also has commission earnings of $250.00, his total regular earnings for the payroll period will be $1,250.00.  The system will divide total regular earnings by the number of hours in the payroll period to determine the hourly rate.  In this case it will be:

$1,250.00/40 = 31.25

The system will use $31.25 as the calculated average for overtime purposes.

If you add an hour of overtime to this employee for this pay period the system will calculate the overtime rate as described below.  Since we are adding an hour at $25.00 (the employee’s standard rate) the calculated average will change to accommodate the new earnings.  The new average rate will be 1275.00/41 = 31.0976.

Since the calculated rate is higher than the standard rate, the system will use the calculated rate when standard is the setup option. 

Calculations based on the different setup options for sample employee:

Payroll Setup Base/Premium	Base Rate	Premium Addition	OT Rate
Normal/Calculated	25.00	15.5488 (1/2 of 31.0976)	40.5488
Normal/Standard	25.00	15.5488	40.5488
Calculated/Calculated	31.0976	15.5488	46.6476
Calculated/Standard	31.0976	15.5488	46.6476
Standard/Standard	31.0976	15.5488	46.6476

Rate calculation and overtime for Piece Rate Employees

Piece rate wages are entered in the Piece Rate Assistant or Miscellaneous Wages for Piece rate employees.  Piece rate earnings are not associated with number of hours worked.  They can be entered as a Base amount, a percentage of Total Sale, or a combination of the two.

The Piece Rate Assistant and Miscellaneous Wages can be found in a few ways:

From Invoice Manager

1. From the Main Menu, select Customer Service, and click Invoice Manager.

2. Find an invoice, select the ellipsis next to it, and click on Piece Rate Wages.

3. Click Wage to enter any miscellaneous wages.

From an Invoice

1. From the Main Menu, select Customer Service, and click Invoice Manager.

2. Open an Invoice.

3. Navigate to the Item Details subtab.

4. Select the ellipsis next to a line item, and click Enter Cost.

5. Navigate to the Labor subtab.

6. Click the Miscellaneous Wage Manager button.

From the Job Details Screen

1. From the Main Menu, select Customer Service, and click Job Manager.

2. Open a Job listing.

3. Click on the ellipsis in the top right corner of the Job Details page.

4. Click on the Piece Rate Wages option.

The Wage Summary will show the earnings as they are split between department and/or Pay Item.

The system will calculate the piece rate employee’s average rate based on the number of regular hours on the timecard or entered as hourly miscellaneous wages.  It will divide total regular earnings by the regular hours per period.  Therefore, his average rate may vary from week to week.

The sample piece rate employee was set up with an average check of $1,000.00 and average hours per pay period of 40.

In our sample pay period, the employee has regular earnings of $940.77.  He has 41 regular hours from his timecard entries and miscellaneous wages.  His calculated average hourly rate for this pay period is $22.9456 ($940.77/41 = 22.9456). 

Calculations based on the different setup options for sample employee:

Payroll Setup Base/Premium	Base Rate	Premium Addition	OT Rate
Normal/Calculated	25.00	11.4728 (1/2 of 22.9456)	36.4728
Normal/Standard	25.00	12.50	37.50
Calculated/Calculated	22.9456	11.4728	34.4184
Calculated/Standard	22.9456	12.50	35.4456
Standard/Standard	25.00	12.50	37.50

Rate calculation and overtime for Hourly Employees

The rate calculation for hourly employees is pretty simple, regular earnings divided by regular hours.  However, there can be some instances that complicate it somewhat. 

If the employee has other regular earnings, or has non-regular hours, his calculated average hourly rate will be affected.

Example 1:

This hourly employee is set up for automatic overtime.  He makes $20.00 per hour and has 47.75 hours on his timecard.  However, 1.5 hours is non-paid and he took 4 hours of vacation time, which are not regular hours.  Therefore, his regular hours add up to 42.25.

To determine the calculated average hourly rate the system multiplies Total regular hours by the employee’s hourly rate to get regular earnings.  It then divides regular earnings by the number of regular hours to get the hourly rate. Or,

            42.25 x 20.00 = 845.00/42.25=20.00

Since the employee has no other regular earnings, it is simply his normal hourly rate.  Since his Normal, Standard and Calculated rates are the same, his overtime rate will be 30.00 no matter what options are selected in Payroll Setup.

Example 2:

The same employee has other regular earnings that are not hourly.  His average hourly rate will change.  The system will use the same formula to calculate his average hourly rate but the regular earnings will have increased.  For example, assume the employee also earned $250.00 in regular commissions.  The system will calculate:

(42.25 x 20.00) + 250.00 = 1095.00/42.25 = 25.92

Therefore, the system will use the rate of 25.92 as the Calculated average rate.  The employee’s Normal and Standard rates will remain 20.00.

Note:  If the system is set up to use the standard rate and the calculated average rate is higher, the calculated average rate will be used.

Example 3:

The same employee has 47.25 hours on his timecard.  Of the 47.25 hours, only 42.25 is regular time.  In addition, he has 8 hours of overtime that was entered through Miscellaneous Wages.  When the employee works in the shop he is paid a different hourly rate than when he is on service calls.  He will be paid 18.00 per hour for shop time. 

His earnings will calculate based on 15.5 hours of Shop time and 34.75 hours of regular hourly pay.

The system will calculate his average hourly rate as follows:

(15.5 x 18.00) + (34.75 x 20.00) = 974.00/50.25 = 19.3831

Calculations based on the different setup options for sample employee:

Payroll Setup Base/Premium	Base Rate	Premium Addition	OT Rate
Normal/Calculated - Shop	18.00	9.6916 (1/2 of 19.3831)	27.6916
Normal/Calculated - Tech	20.00	9.6916	29.6916
Normal/Standard - Shop	18.00	10.00	28.00
Normal/Standard – Tech	20.00	10.00	30.00
Calculated/Calculated	19.3831	9.6916	29.0747
Calculated/Standard	19.3831	10.00	29.3831
Standard/Standard	20.00	10.00	30.00

Overtime Options

There are three methods you can use to pay overtime to your employees.  Refer to the chart to determine which method is recommended for your employees. 

Method No.	Description	Recommended for Employees with Pay Type
		Hourly	Piece Rate	Salary
1	Automatic overtime	Yes	No	No
2	Manually assign premium codes to timecard or hourly miscellaneous wage entries	Yes	Maybe	Maybe
3	Manually enter lump sum earnings for overtime in miscellaneous wages	No	Maybe	Yes

Method 1 – Automatic Overtime

Automatic overtime can only be used for hourly employees whose hours are entered through the Timecard Manager.  This includes entries that are automatically created as Call Progress is completed, and manual timecard entries. 

The system will calculate overtime weekly and daily for all regular hours worked based on your overtime setup (in Payroll Setup).  It can be combined with manual overtime and can be overridden for a payroll period.

You will select the “Automatic Overtime” checkbox in Employee Setup for all employees that should calculate automatic overtime.

Example 1:

This is an example of automatic overtime calculation with no manually entered overtime.  The employee is an hourly employee who has 46.25 paid hours in the payroll period.  The system is set up to calculate overtime after 40 hours in a week.  Four of the hours were for vacation pay and are not considered regular hours. 

The employee only has 42.25 regular hours worked so that is what the system will use to calculate that he has 2.25 hours of overtime.  

Example 2:

The same employee has the same 46.25 hours on his timecard, 4 of which are non-regular.  However, he worked 3 hours late on Monday so the employer wishes to apply that as overtime to the specific job he was on that day.  A premium code of OT was manually assigned to 3 hours on the employee’s timecard for that day.

The system will pay him the 3 hours as overtime since it was manually entered, but does not automatically calculate any overtime hours because the 3 manual hours exceeds the 2.25 hours the system would automatically calculate.

If the manual overtime is less than what the system would calculate for overtime, the system will calculate the difference automatically when you calculate overtime.  For instance, in this case the employee should be paid 2.25 hours in overtime.  If 1 hour was manually assigned a premium code, the system will automatically calculate the remaining 1.25 hours.

Method 2 – Manually assign premium codes

You can manually assign a premium code to timecard or hourly miscellaneous wage entries in order to calculate overtime pay for employees.  The system will look at the premium code setup to determine what it should use for a multiplier. 

When assigning a premium to timecard entries, you can determine how many of the hours in the time segment should be paid at the premium rate.

Manual premium assignments to timecard entries should be used for salaried employees whose salary is posted based on timecard entries, or hourly employees.

When assigning a premium to miscellaneous wage entries you will enter separate line items for the regular vs. premium rate hours.  You will use this method to enter overtime for hourly employees whose time is not entered through the timecard manager.

Do not change the RegRate when manually entering overtime in miscellaneous wages.  The system will look at the premium code to determine how to calculate the overtime earnings.  For instance, if the premium code OT has a multiplier of 1.5, the system will apply .5 of the premium addition to the base amount for the overtime earnings. 

Method 3 – Manually enter lump sum overtime earnings

If you have an occasion to pay a salaried or piece rate employee overtime, you must manually calculate the amount you owe the employee for his or her overtime pay and enter the amount in miscellaneous wages.  Be sure to use a Pay Item that will post to the correct GL account.

Deferred Wages and Overtime Calculations

When entering Miscellaneous Wages, the release date and earned date allow you to control the period whose premium rate is affected by the deferred wage separately from the period in which the wage is paid to the employee.  For instance, you can hold all commissions and release them in the last period of the month without having the commissions affect the regular rate for the last period of the month. 

A deferred wage will affect premium rate calculations for the period that includes the earned date.

A deferred wage will be paid to the employee in the period that includes the release date.  If those wages are earned in periods prior to the period in which they are paid (released), Successware will recalculate the premium rates for the previous periods and make a special miscellaneous wage entry for additional premiums that must be paid (if any). 

This additional premium is based on the difference between the original premium rate of the prior period and the new premium rate as affected by the released wages. 

For example:

• If an employee earns a commission of $200 on 03/24/04 for the weekly period ending 03/27/04, and the commission is not released, this commission is not included in this period’s wage summary.
• This commission does not affect the regular rate or the premium rate calculation for the weekly period ending 03/27/04.
• The 03/27/04 period includes 6.25 hours of overtime. The calculated average (regular) rate for the period ending 03/27/04 (not including the $200 commission) is calculated to be $19.3837/hr and is the “premium base”. The regular rate (and premium base) is calculated by adding all earnings that are considered “regular wages” and dividing that total by “regular hours”.  In our example, $974.00/62.25 = 19.3831.

Examples display the heading of the Wage Source report for the employee and the section of the Payroll Period Summary in detail for the employee. 

The sample payroll company is set up to use the Normal rate for the base portion and the Calculated average rage for the premium addition.  Notice that the system calculated the overtime rate based on the base of $18.00 for Shop time and $20.00 for Tech earnings.  The same premium addition of $9.6916 was added to both base wages (19.3831/2 = 9.6916).

The wage is then released on 04/01/04 to be included in the period ending 04/03/04. The commission is included in this periods wage summary.

• The commission does not affect the regular rate or the premium rate calculation for the weekly period ending 04/03/04. However the regular rate for the period ending 03/27/04 is recalculated to be $23.3632/hr, now that the $200 commission earned during that period has been released.

The regular rate and premium base for the current weekly period ending 04/03/04 is calculated using the same formula – regular earnings divided by regular hours, or, 856.67/42.83 = 20.0001.  It does not include the $200.00 commission to determine the premium rate even though the pay item is marked IsRegOT. 

Because it is a deferred wage, the commission is included in the Premium excess.  The premium excess includes Non-regular earnings, deferred earnings, and premium earnings.  Premium earnings only include the premium addition portion of premium pay.  For instance, of the 27.6916 premium earning for Shop overtime, the 18.00 base is not included.  Only the 9.6916 is reported as premium earnings.

• The system will include special miscellaneous wage entries in the current period to make up for any premiums that were missed in the pay period ending 03/27/04 as a result of the deferred earnings. Notice there are three overtime entries in the sample period summary at a rate of 1.9900.  Those are entries to pay the employee the missed premium.

Look at the Period Summary for the first payroll period ending 03/27/04.  Notice that the employee had 1.75 hours of SHOP-OT, department 20, 3 hours of TECH-OT department 21, and 1.5 hours of TECH-OT department 22.

The Deferred Wages report identifies the overtime entries in payroll period in which the commission was earned and calculates what the premium rate would have been if the commission had been released in the same payroll period.  In our example the adjusted Regular Rate is 23.3632.  Then it calculates the overtime rate based on the new regular rate. 

The system will only pay the employee the premium pay that he would have made, not the adjusted regular rate.  It will calculate the difference in the premium pay as follows:

Original Overtime rate – Original Premium Base rate = Original Premium rate

        27.6916 – 18.00 = 9.6916 or 29.6916 – 20.00 = 9.6916

Adjusted Overtime rate – Original Premium Base rate = Adjusted Premium rate

        29.6816 – 18.00 = 11.6816 or 31.6816 – 20.00 = 11.6816

Adjusted Premium rate – Original Premium rate = Rate

        11.6816 – 9.6916 = 1.99

The additional premium wages are created for each related entry from the prior period.  This allows Successware to relate the additional premium to the appropriate pay item and job, so that the items are properly expensed.  Notice that there are entries for 1.75 hours of SHOP-OT, department 20, 3 hours of TECH-OT department 21, and 1.5 hours of TECH-OT department 22 in the current payroll period (ending 04/03/04) at a rate of 1.99.

Pay Base

If you pay your piece rate employees a base amount per job, determined by the task performed, you can record the pay base per invoice when you post the invoice and enter the earnings later as Miscellaneous Wages.

With this payroll method, you will need to enter a pay base for each task in the Pricebook.  When you record a customer invoice using the tasks you can then select that pay base.  You can also run reports to total the pay bases later.   

To Enter a Pay Base on a Task:

1. Open the Pricebook by navigating to the Main Menu, selecting Purchasing, and clicking on Price Book.
2. Click on the Tasks tab at the top of the page.
3. Select a Category and Group on the left side of the page.
4. Click the Edit icon to add the pay base to a task.
   
5. Select the Standard Price tab and enter the pay base you will pay employees for the task in the Override amount field.

To Record a Pay Base for an Employee:

You will record the pay base that you will pay the employee for each task as you add the tasks to the customer invoice.  You can select the pay base that you entered on the item in the Pricebook or enter a different amount.

To select or enter the base pay:

1. From the Main Menu, select Customer Service and click the Invoice Manager.
2. Find the invoice and click the Open Invoice button.
   
3. In the Item Details tab, click the ellipsis in the Actions column and select Employee Pay Base.

If the task includes a pay base, the system will display the default base.  If the task does not include a pay base, the system will display a blank Employee Pay Base form where you will enter the desired amount.

Importing Pay Base Wages to Payroll
When processing payroll you can import pay base wages to create payroll Miscellaneous Wages. Pay Base Wages are imported from the Payroll Manager's Review Period section where there is a button called "Pay Base Import".

From the Pay Base Import screen, you can:

• Filter the items by Employee, Job, or Payroll Period.
• Select/unselect all listed items for import.
• Import or undo the import for the Employee.

Paying Commissions

There are multiple ways of adding commissions to jobs in Successware. They can be automatically added by configuring tasks in the Pricebook or in the Employee Manager, or they can be added manually from the Invoice or Job Details screen.

Please keep in mind that the tech credit on the Job Details page is for reporting purposes only.

You will need to enter the commissions manually on the invoice or from the Job Details screen, or automatically by specifying the commission amount in the Pricebook or in the Employee Manager.

To Enter Commissions Manually on an Invoice:

1. From the Main Menu, click on Customer Service and select Invoice Manager.
2. Find the Invoice for the job and click the eye icon under the Actions column to view the invoice.

3. Select the Item Details tab.

4. Click on the ellipsis at the end of the line item. Make sure it is not a part only or labor only line item, as you cannot add commissions to parts or labor only items.
5. Click the Enter Cost button.

6. Click on the Misc tab.

7. Click the Miscellaneous Wage Manager button.

8. Click the + New button to add a new commission.

9. Fill out the required fields to specify which employee should earn the commission, and how much they should earn.

10. Click the Save button.
10. Next, go back to the Misc tab on the previous screen and click Select Commissions so that you are able to check the commission that you just created.

To Enter Commissions Manually on the Job Details screen:

There are several ways to access the Job Details screen. You can:
1a. From Dispatch, select a job on the board, and click the Job Details button.

1b. From the Job Manager, click the eye icon under the Actions column.

1c. From the Invoice Manager, click the ellipsis at the end of a line, and select Job Summary.

2. From the Details tab of the Job Details screen, select the Assignment section and click the Commission button.

3. Fill out the required fields to specify which employee should earn the commission, and how much they should earn.
4. Click the Save button.

To Enter Exact Dollar Commissions Automatically with the Pricebook:

1. From the Main Menu, select Purchasing, and click on Price Book.
2. Click on the Tasks tab.
3. Select a Category and Group on the left side of the page. Click Edit for a task item.

4. Click the "2 Standard Price" tab.

5. Add the commission amount into the Override Amount ($) field under the Piece Rate Pay Base section.

This amount will be used on the employee's timecard when the task is added to an invoice.

To Enter Percentage Commissions Automatically from the Employee Manager:

1. From the Main Menu, select Setup and click on Employee Management.

2. Click the Edit button on a line for an employee.

3. In the Wage Info tab, make sure that Piece Rate is selected as the Pay Type.

4. In the Pay Type tab, add in a percentage to pay the employee for Parts, Labor, and/or Miscellaneous sales.

You can also enter commissions for agreement sales. For more information on adding commissions to agreements, see our article on Agreements in Platform.

Timecard Entries

Timecard entries allow you to keep track of each block of time in your employee’s days. Time entered in Call Progress is automatically added to an employee’s timecard.

To access the Timecard Manager, navigate to the Main Menu, select Payroll, and click Timecard Manager.

Manual Timecard Entries

Manual timecard entries are created directly in the employee’s timecard. Manual timecard entries can be job related or non-job related. Manual Timecard entries in addition to those that are job-related could include meeting time, shop time, vacation or personal time and lunch entries.

Recording Timecard Entries

1. Open the Timecard Manager.
2. Use the drop-down menu to select the employee.
3. Use the date navigation  buttons to choose the date of the timecard entry.
4. Click Modify.

5. Click the Add Entry button.
6. Select the appropriate timecard status.
7. Enter the In and Out times.
8. If necessary, check the Non-Productive box. This field is defaulted by the setting associated with the Timecard Status selected. If you want to change the Productive status of a timecard entry, add or remove the checkmark. The Productive Status of a Timecard Entry determines how the particular timecard status is handled when calculating the technician's Billable Hour Efficiency for scoreboard reports.
9. Use the drop-down menu to select the department to which you wish to apply the timecard entry. For non-job-related entries, the employee’s default department will appear.
10. For the Rate, you can select RegOT (Regular Rate with Overtime), AvgRegRate (The Average of the employee's Regular Rate), or None.
11. If the Timecard is a Paid item, the Pay Item field will be displayed.
12. The employee’s pay rate will be displayed.  This will come from the employee’s standard hourly rate in employee setup, or from the pay rate entry for the corresponding pay item.
13. If you wish to apply a premium rate for the block of time, select Premium time from the drop-down list.
14. If you have applied a premium time, choose the duration of the total timecard entry that should be calculated at the Premium Rate.
    
15. Click Accept.

Note: The Total Time (time out - time in) of any timecard entry can be broken down into five categories. Where it falls in the categories will determine how it is handled when preparing the payroll period.

Regular time- ordinary paid time that will accumulate and turn into overtime and effect regular/premium rate calculations.

Non-regular time- paid time that does not affect overtime and regular/premium rate calculations.

Premium time- time that is paid at a premium.

Non-paid time- time that is not paid.

Overtime- time that is paid at the overtime (OT) premium.

The Assignments option at the bottom of the screen includes a list of calls that the technician has been assigned to on that day. You can also view Other scheduled calls as well as Unscheduled calls, using this screen.

NTCs (No Timecard Entries)

NTCs are blocks of time on the employee timecard where there is no timecard entry. Successware Platform fills in the gaps between defined timecard entries with NTCs. In employee setup you will determine whether or not the NTCs are paid or unpaid and whether the NTCs are counted as regular time. NTC entries are considered to be Productive Time by default for the sake of Scoreboard reports. If an employee is engaged in Non-Productive time, you must replace the NTC entry with a Non-Productive Timecard Entry to change the status.

NTCs cannot be edited but can be replaced by creating actual timecard entries to account for the time filled by the NTCs.

Note: Successware Platform will only create NTCs on the current date or when making entries on the employee’s timecard on previous dates. NTCs will not be created on future timecard entries.

End of Day Punch Out

By default, Successware Platform is set up with a Timecard status called DayEnded (End of Day Punch Out). This status allows you to create a timecard entry at the end of the workday for an employee that only requires an In time. Based upon the End of day punch out time Successware Platform will:

• Prevent the creation of timecard entries on the day after the punch out time.
• If there is a gap in time between the last out time on the timecard and the End of Day Punch out time, Successware Platform will create an NTC to account for the gap in time.
• If there is an open timecard entry and an end of day entry is entered, the end of daytime will be entered as the Out time for the previous timecard entry.

Timecard Assistant

Rather than creating individual timecard entries for each employee, the Timecard Assistant allows you to create recurring entries for multiple employees.

To access the Timecard Assistant:

1. Navigate to the Timecard Manager page.

2. Click the Timecard Assistant button at the bottom of the page.

3. The Timecard Assistant screen will slide out from the right side of the page.

When creating an entry in the Timecard Assistant, you'll need to:

• Specify the Status (Available, Lunch, Meeting, etc.) the Time In and Time Out, and add a Comment.
• Note how often this will recur.  This includes whether the entry should be every day, every week, every month, and on what dates this should begin and end.
• Specify which employees should be included in this recurring timecard entry.

Once you've added in the required fields, click the Create button at the bottom of the page.

To review any recurring entries that have already been created, click the Recurring button at the bottom of the screen. 

Looking for a more interactive course on Payroll? Check out our Learning Management System (LMS)! Our courses are available to all Successware users. If you don't have a sign-in for our LMS, contact us at [e-mail] for a free account.

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