Payroll Employer Cost Adjustments

Employer Payroll costs that are incurred each pay period can be set up on the Employee Payroll Templates. Employer Cost Adjustments that are set up on the template do not affect the pay of the employee, but they are payroll expenses directly tied to the employee's paycheck. This could include a matching amount paid for a retirement account, the employer's portion of insurance, or any other cost incurred that is directly tied to the employee's pay.

To set up a new Employer Cost Adjustment, navigate to:

Payroll > Support Lists > Pay Adjustments

This support list will include all EMPLOYEE pay adjustments along with all EMPLOYER cost adjustments. To designate an adjustment as and Employer cost instead of as an adjustment to the employee's pay, you will need to add the word EMPLOYER to the description of the adjustment. You can use all capital letters, proper case, or lower case when adding this word to the description.

Below is an example of a Payroll Adjustments list that includes both employer and employee adjustments.

To filter to only employer costs, I can type the word employer in the Description column while using the Contains filter. Alternatively, I can change the filter to Does Not Contain to see only payroll adjustments. Click on the icon in the filter field to choose the correct filter.

To add a new Employer Cost Adjustment, click on Add New at the top left of the Payroll Adjustments list.

You will see the Payroll Adjustments popup where you can fill in the information. In this example, I am setting up an adjustment to book expenses for Employer paid life insurance.

Description: Brief description of the adjustment, to include the word EMPLOYER (required)

Group Code: Assign the box on the W-2 forms to populate the amounts if applicable

Category Code: Custom list to categorize adjustments if applicable

Adjustment Type: Fixed Amount or % of Gross Pay.

Amount: (Currency or Pct): If the amount is the same for every employee, add the dollar amount or percentage. If it varies by employee, leave at 0.00 and customize on each employee template.

Maximum Amount Type: Allows you to set a yearly or a lifetime maximum on the employer cost. When left at 0.00, no maximum will be set.

Pre-Tax Payroll Adjustments: If the Employer Cost will be considered taxable income to the employee, you can add all of the taxes that are applicable to the income. You will need to verify this information with your tax professional.

Click OK at the top right to save the adjustment.

Now that the Employer Cost is saved, I can add it to my Payroll Templates.

First, I will open an employee master record, and navigate to the Payroll Template tab. From the Payroll Template Tab, I will select the Employer sub-tab.

Next, click on the Add button at the top left and choose Employer Cost.

You will see a pop-up of Payroll Adjustments that is pre-filtered to the Employer adjustments. Select the cost you wish to add to the template and click OK at the top right of the pop-up.

The adjustment will populate on the template. You will need to add the accounts to be debited and credited. Double click in the boxes showing the red X to pull up the chart of accounts and select the correct accounts. You will need to verify the correct accounts to select with your tax professional.

Next you can add the Cost Amount or Percentage and any Max Amount that applies. Once you have verified the amounts are correct, click on Save, Save and Close, or Save and New to apply these changes to the employee's payroll template.

These amounts will now be booked automatically with each paycheck run. You can report on the employer costs in the Payroll Detail Report.