About payroll calculations

Payroll calculations provide the rules for computing deductions, benefits, and employer costs. You can set up payroll calculations manually, or you can create the set of standard calculations supplied by Sage 100 Contractor.

After you have set up the calculations, you can add them to the employee records. Each employee record maintains its own list of calculation rates, calculation maximums, and quarterly totals for the payroll calculations. On the Calculations tab in the 5-2-1 Employees window, you can edit the calculation rates and maximums for one employee record without affecting the others.

When you compute payroll, Sage 100 Contractor reads the calculation rates and maximums from the employee record, and uses those rates with the payroll calculations. Depending on the type of calculation you want to set up, Sage 100 Contractor: (1) makes certain calculation selections for you that you cannot change; and (2) makes certain suggestions about what you may change:

• Federal and state taxes (Social Security, Medicare and FUTA). Sage 100 Contractor contains the tax tables necessary for computing federal and state income taxes. For each state that your employees work in, set up a payroll calculation to compute the state income tax. While some states do not levy an income tax, the calculation is still necessary to maintain accurate wage information.

  To compute taxes correctly, some states require additional setup in the employee records. For details on setting up tax calculations for specific states and municipalities, see Appendix D—Tax Setup Information.

  Note: Do not set up more than one calculation for Tax Type 3 (Employer Social Security) or Tax Type 4 (Employer Medicare). Doing so will cause audit errors.

• Local payroll tax districts. Many counties and municipalities levy income taxes. You can specify the correct local payroll-tax districts and then assign the locales to the appropriate job and employees.
• Calculated amounts that add to or deduct from pay for specific reasons. In some cases, it is necessary to create different payroll calculations for the same purpose. For example you may need different methods to calculate wage garnishments, retirement plans or union deductions.

Building Payroll Calculations

There are two ways you can create payroll calculations:

• Create standard payroll calculations automatically. To get started, we recommend that you take advantage of the standard calculations that Sage 100 Contractor can automatically create for you. If you choose to create the set of standard calculations, you will need to review and possibly adjust and/or manually add additional calculations later. For more information, see About prebuilt standard payroll calculations.
• Set up payroll calculations manually. You can set up payroll calculations manually by defining each type of calculation that you will need. There are many parameters for each calculation that must be carefully reviewed before setup.