Using Third-Party Payroll Services
The Payroll Service function in Total Office Manager simply prepares a bill on behalf of your payroll company, instead of payroll checks. You also have the option to create an export file that can be sent or uploaded to a payroll company rather than manually entering your payroll information on their website.
To use a payroll service (or if you lease your employees from another company), the Payroll Service function must first be enabled in the company preferences. Afterward, each participating employee record is opened and set up to use the payroll service.
Quick Overview of Setup
- Enter a third-party payroll vendor, such as “Paychex”.
- In Preferences > Payroll tab, tick the “Enable Payroll Service” checkbox, then choose your payroll vendor from the drop-down list.
- Open each participating employee record and check their “Is Paid By Payroll Service”.
- Be sure each employee has earning items (as usual). They do not need tax related payroll items.
- Use timesheets for each hourly employee.
- Process payroll in a normal fashion (see Related Topics, below). When you create paychecks, those employees who use the payroll service have a bill created instead of a paycheck. The vendor on the “paycheck-bill” is your payroll service company.
- Export Payroll File Option: You also have the option to create an export file that can be sent or uploaded to a payroll company rather than manually entering your payroll information on their website.
The “Paycheck-Bills” are the means by which labor expenses get to the customer’s job costing. Pay the payroll service company using the Pay Bills form, as though you were paying any other bill. You can add line items and make adjustments to the bill so that is exactly matches the amount you owe the payroll company. Compare your bill to the payroll company’s “Cash Requirements” report (or by another name).
Enabling the Payroll Service Feature
To enable the company Payroll Service feature:
- Enter a vendor for your payroll service such as ADP or Paychex.
- From the main menu, go to Edit > Preferences > Payroll, or From the toolbar, click the Preferences button, then go to the Payroll tab.
- On the Payroll tab, tick the “Enable Payroll Service” checkbox, then choose your payroll vendor from the drop-down list. Close the Form.
- When in preferences, activate the payroll service feature by going to the Payroll tab, then tick the Enable Payroll Service checkbox and select your payroll vendor.
Setting Up Employees to Use the Payroll Service
- If not done already, set up your Payroll Earning Items (see Related Topics, below). If all employees are using the payroll service, then the payroll items for Deductions, Taxes, and Liabilities do not have to be setup.
- Open each participating employee record and tick their “Is Paid By Payroll Service” checkbox (see illustration). To have an employee be included in your payroll service, tick the “Is Paid By Payroll Service” checkbox in their employee record.
- Click Menu > Payroll Items. In the Employee Payroll Items (see Related Topics, below) for each payroll service participant and modify the Earnings amounts (used on timesheets for each employee) to include any fees and taxes.
IMPORTANT NOTE: When entering the Earnings Amount, it should include any fees or taxes that you pay for that employee. In other words, the value in the Amount field should represent the entire hourly cost of the employee to the company. - Click “Save & Close” when finished.
When modifying a payroll service employee’s Earnings, be sure to include any additional taxes and fees plus the employee’s hourly wage in the Amount field. These expenses should include FICA, Medicare, Social Security, etc.
Usage
- At this point, you are ready to use timesheets and assign them to jobs. This timesheet information can also be printed and sent to your payroll service.
- Process payroll in a normal fashion (see Related Topics, below). When you create paychecks, those employees who use the payroll service actually have a bill created instead of a paycheck. The vendor on the “paycheck-bill” is your payroll service company. Of course, the payroll service company then issues the employee an actual paycheck. The “Paycheck-Bills” are the means by which labor expenses get to the customer’s job costing.
- Simply pay the payroll service company using the Pay Bills form, as though you were paying any other bill. You can add line items and make adjustments to the bill so that is exactly matches the amount you owe the payroll company. You can compare your bill to the payroll company’s “Cash Requirements” report (or by another name).
Export Payroll File
You also have the option to create an export file that can be sent or uploaded to a payroll company rather than manually entering your payroll information on their website.
Modifying Payroll Service Settings
The Payroll Service settings may be modified so that certain employees are on the service, while others are paid with company paychecks. There are some rules to keep in mind, however, when adjusting the payroll service settings.
The “Is Paid By Payroll Service” Checkbox is Missing
In an employee form, the checkbox “Is Paid By Payroll Service” will not display if the system wide “Enable Payroll Service” preference checkbox is not ticked (checked).
This functionality is useful to prevent new hires from accidentally being enrolled in the payroll service. For example, a company can enable the payroll service function in system preferences then tick each employee’s “Is Paid By Payroll Service” checkbox for all who are on the service. Then the system-wide preference can be un-ticked, so new employee records will have the “Is Paid By Payroll Service” checkbox hidden. Thus, keeping new hires from accidentally being enrolled in the payroll service.
Previous Payroll Service Users Are Unenrolled Individually
Clearing the system wide “Enable Payroll Service” preference checkbox will not remove existing payroll service users from the service. If an employee has been paid through a payroll service, and the system-wide preference is then un-ticked, the employee will continue to use the payroll service until the “Is Paid By Payroll Service” checkbox is un-ticked in the employee’s record.
Clearing the “Enable Payroll Service” checkbox in system preferences (circled in green) will not clear the “Is Paid By Payroll Service” checkbox in an employee record (see green arrow). Each employee must be removed from payroll service usage individually.
To remove an employee from payroll service usage, open the employee record and un-tick their “Is Paid By Payroll Service” checkbox. The employee’s payroll items (Menu | Payroll Items) will then need to be updated. This is because when an employee is set up to use a payroll service, the only necessary payroll items to setup are Earning Items. But when an employee is taken off payroll service usage, the full complement of payroll items must be established (Deductions, Taxes, Additions, Time Off, and Employer Liabilities).
