Sage-Maintained Payroll Formulas

There are two types of payroll formulas in Sage 50: Sage-maintained and user-maintained.

• Sage-Maintained Payroll Formulas apply to all the companies you have set up in Sage 50. When you subscribe to a Sage Business Care, you receive predefined formulas containing federal-, state-, and (some) local-regulated tax calculations. As a tax subscriber, you will receive tax updates periodically as dictated by changes in tax laws. Installing these updates overwrites any changes made in Sage-Maintained Payroll Formulas.
• User-Maintained Payroll Formulas are only used by the specific company for which they are set up. They do not get overwritten by tax updates, so that is where you would enter customized calculations for state unemployment rates, 401(k) contribution scenarios, special localities, vacation accruals, or anything not handled by the payroll tax update service.

You must subscribe to Sage Business Care to use and set up payroll formulas in Sage 50.

If you just installed Sage 50, federal, state, and most local payroll taxes will not calculate automatically or accurately during payroll entry. To calculate these tax amounts within Sage 50 and to stay current with regulatory changes, you should subscribe to Sage Business Care and install the latest update.

• Subscribe to Sage Business Care
• Install the tax update

Formula ID: If you plan to enter a new formula, enter an ID that is not already in the Formula list box. You should follow the naming conventions of Sage 50 and start the ID with the two-letter postal abbreviation for your state.

Name: The name you choose for your formula is important, because it allows Sage 50 to identify which payroll formula to use for a particular field. The name has two (and sometimes three) parts separated by a single space:

• calculation name: this is the name of the tax or plan--for example, FICA or 401K
• payee (for certain formula types): EE (employee pays) or ER (employer pays)
• payroll tax year: this is the last two digits of the calendar year to which this tax formula applies

You can look at the sample company that comes with Sage 50 for examples.

Affect on gross pay: A formula can either add to or subtract from gross pay. Most taxes or benefits will subtract from gross pay. In some cases, the formula may either add or subtract from the gross in payroll calculations. Use " Either subtracts or adds..." for a vacation or sick time field to allow the calculation of a deduction to be positive, or the calculation of an addition to be negative.

Filing Status: If this calculation is to be used for all employees, regardless of Filing Status, select All Filing Statuses from the drop-down list. If you choose an alternate status, create multiple tax formulas with unique tax IDs for each possible filing status; make sure each tax ID and filing status variation uses the same tax name. See a list of valid state filing statuses for each US state.

How do you classify this formula?: You can select either a Tax (FICA, FUTA), a Deduction (Garnishment), a Benefit (Insurance, 401K), or Reimbursement (positive adjustment).

Type: Selecting Deduction will subtract this calculated amount from the gross, selecting Addition will add the calculated amount to the gross, and selecting Exception will allow either a positive or negative number in payroll calculations. Use Exception for a vacation or sick time field to allow the calculation of a deduction to be positive, or the calculation of an addition to be negative.

Tax Agency: You select the type of government this tax applies to by selecting one of the available options. If you select State or Local government, you must specify the state or locality to which the tax applies. For State, enter the two-character postal abbreviation; for locality, you can type in the name of the locality. You can indicate if this tax applies to all states or localities.

Use this formula as a filter on the Payroll Tax Report: Select this check box to have this calculation appear on the Payroll Tax Report menu or to have the payroll field that uses this calculation appear on the Exception Report. The Taxable_Gross variable must be included in the formula when selecting this check box.

Formula: The Formula box contains the equations you use to actually calculate taxes. If you subscribe to one of the Sage Business Care plans, Sage 50 supplies the equations for most types of taxes. If you need to set up your own tax calculations, get more detailed information on payroll formulas and functions .

Set Up Tax Brackets: This is only required if you have used the TABLE function in your tax formula. If your formula does not use the TABLE function, you do not need to set up tax brackets.