How to Sell Items to Employees and Create Payroll Deductions
Have you ever wondered how to sell products or services to employees and deduct payments from their paychecks through the regular payroll process? If the answer is yes; here is how to do it.
This topic deals with the subject of how to sell products or services to employees and make deductions or payments from their paychecks. You may also find ways to adapt this method to similar situations.
Step 1: Add the Employee as a Customer
- Add the employee as a customer to the Customer:Job list. Use a nickname or put a “–C” after the name to designate this as a customer name, distinct from the employee’s name.
- Create an Other Current Asset account and name it appropriately, such as “Employee Purchase Asset.”
Step 2: Create an Invoice for the Customer (employee) Created in Step 1
- From Total Office Manager’s main menu, click Customers | Invoice/Cash/Credit Sales List.
- Click the Invoice button and select New Invoice.
- Add the services or items purchased by the employee/customer on the invoice.
- Click Save & Close to record the invoice.
Step 3: Create a Payroll Deduction Item
- From Total Office Manager’s main menu, click Employee | Lists | Payroll Item Lists.
- Click the Payroll Item button, and choose New Payroll Deduction Item.
- Deduction Types form, enter an ID such as “EMPLOYEEPURCHASES”.
- Enter a description such as “Deduction Employee Purchase”.
- From the Account ID drop-down list, choose the Other Current Asset account from step 2.
- In the Vendor drop-down list select <Add New> and create a new Vendor called EMPLOYEEPURCHASES.
- In the Calculation Type field, select Fixed Amount.
- Make the item deduction from Net Pay.
- Leave the Amount and Limit fields blank. Click Finish.
Step 4: Add the Deduction Item to the Employee
- From Total Office Manager’s main menu, click Employee | Employee List.
- Select the employee to modify, right click, and select Payroll Items.
- Select the deductions area of Payroll Items and then select the deduction item created in step 4.
- If the amount of the deduction is a fixed amount that the employee is paying at once enter the amount in the item setup otherwise leave the amount as zero.
- Once the item setup is complete click Save and Close to close the setup form.
Step 5: Verify the Deduction in Process Paychecks
- After processing pay groups, but before posting payroll checks verify Employee Deduction amounts in your payroll checks.
- From Total Office Manager’s main menu, click Employees | Process Paychecks.
- Select a paycheck for an employee that uses the deduction item created in step 4 and verify the amount being withheld from the employees check to ensure that the proper amount is being withheld from the employees check.
- If you manually change the amount of the deduction you must recalculated the payroll check by selecting Paycheck Details ^ and then select Recalc Paycheck.
- Click Yes when prompted to use your manual changes to recalculate the paycheck.
- If the deduction item amount is no longer needed or the employee is set to a fixed amount and has repaid all monies owed, you should inactive the deduction item in the employee’s payroll items or change the deduction amount to zero.
Step 6: Discount Deduction Amount from Invoice
- Receive Payment against the customer invoice created in step 2.
- From Total Office Manager’s main menu, click Customers | Receive Payments
- Select the customer account created in step 1 for the Customer.
- Check the Show Discount Information Box.
- For the Discount Account select the Other Current Asset account created in step 1, for the Discount Amount enter the amount of the deduction withheld from the employees check, and for the Discount Date enter in the Pay Date of the employee Payroll Check
- After all payments have been made by the employee, if the Other Current Asset account results in a negative number, then either the deduction has been tracked from the paycheck without tracking the payment, or too much was deducted from the employee paycheck.
- After all payments have been made by the employee, if the Other Current Asset account results in a positive figure, either the payment was tracked without tracking the deduction from a paycheck, or too little was deducted from the employee paycheck.
- The vendor created in step 4 should not be used for any other business purpose including bills for employee purchases.
- The balance of the customer account created for the employee in step 1 indicates how much that employee owes you for Employee Purchases.
- The customer account created in step 1 should only be used for Employee Purchase transactions to ensure that the correct amount is being withheld from the employee’s paycheck.