How to add a benefit or deduction

You should first try to set up benefits or deduction in the Payroll Settings wizard. Adding benefits there will save you time.

  1. From the Maintain menu, select Payroll and then Payroll Settings.
  2. Select Benefits, then Summary of Benefits.
  3. Select Add Another Benefit.

Adding a benefit or deduction outside Payroll Settings

Even if a benefit or deduction is not specifically supported in the Payroll Setup Wizard, you can still set it up in Employee Defaults.

Note: In this topic, we give general guidelines for setting up a benefit. To see more specific examples of many common benefits or deductions, see the section called Creating Common Payroll Deductions in this list.

Important! You must subscribe to a plan that includes payroll for payroll deductions to be calculated in Sage 50. If you have nnot subscribed, you only need to follow step 1 below since you will have to manually calculate and enter the amounts for your payroll deductions.

  1. From the Maintain menu, select Default Information, and choose Employees. Sage 50 displays the Employee Defaults window.
  2. Select the Employee Fields tab. Scroll down to a blank line; give your new payroll field a name. (Payroll fields must start with an alpha character.)
  3. Enter or select a G/L account (liability) associated with the deduction. To display a list of existing accounts, type ? in this field or select the Lookup button. To add a new account, type + or double-click the field, which displays the Maintain Chart of Accounts window.

  4. If you're going to enter a formula to calculate an amount for this field, then check the Calculate box. Enter a formula name, such as 401K EE, as a placeholder. (We'll create the actual formula in Step 2.)

    Note: Deductions can only be calculated if you subscribe to a plan that includes payroll.

  5. A Memo field tracks an amount but doesn't update your general ledger (tips, for example). The Run box means the amount for this field doesn't reset to zero when you close the year (like vacation hours, in many companies).
  6. Select OK to save the new field. For calculated amounts, you would now set up a payroll formula.

  1. From the File menu, select Payroll Formulas, then choose User-Maintained. Sage 50 displays the User-Maintained Payroll Formulas window.

    You must subscribe to a plan that includes payroll to do this.

  2. Enter the formula ID you assigned for the payroll field in Step 1. In our example, we called it 401K EE.
  3. Enter a formula name using the NAME[space]YEAR rule. For example, enter 401K EE 11, where 11 is the current payroll tax year (2011).
  4. Effect on gross pay would usually be Subtracts from Gross. Leave Filing Status at All, unless this is specific to a filing status (single, head of household, etc.).
  5. Specify whether the formula represents a Tax, Deduction, Benefit, or Reimbursement. Depending on your selection, you may need to fill out additional fields.
  6. Clear the Use this formula as a filter... check box.
  7. In the Formula box, you define how to calculate the payroll amount. You will need at least one line: ANSWER=x. You should go and look at the sample company, Bellwether Garden Services, and see how they set up formulas for common deductions. (To create a new line in the formula, press CTRL+J.)
  8. To learn about commands used to create formulas, click here.
  1. Use this procedure to define the new field's contributions as pre-tax deductions and record the contributions on employee W-2 forms. This only applies if you subscribe to a plan that includes payroll.
  2. Go back into Employee Defaults (Maintain, Default Information, Employees).
  3. Select the Fed_Income payroll field on the Employee Fields tab of the Employee Defaults window. This is the default federal withholding payroll field.
  4. Select the Adjust button. Sage 50 displays the Calculate Adjusted Gross window.
  5. Make sure the check box for your new field is selected as well as Gross. Then, select OK to return to the Employee Defaults window. Deductions will be subtracted from Gross in computing taxable wages (adjusted gross). This ensures proper calculation of withholding as well as proper taxable gross reporting on payroll tax forms. If these contributions can be deducted from gross pay prior to calculating your state's income tax, select the State payroll field next.
  6. Click the Adjust button and include the new field in the Adjusted Gross. Then, click OK.
  7. Continue to do this for each Employee payroll tax field and Employer payroll tax field that needs to be adjusted to include the new field's contributions.
  8. After making your adjustments, select the OK button to return to the Employee Defaults window. Click OK again to save the default information.
  9. From the Maintain menu, select Payroll, then Payroll Settings.
  10. In the left navigation area, click Taxes, then Assign Tax Fields.
  11. Select the W-2 Fields button. Sage 50 displays the Assign Payroll Fields for W-2s window. Make sure that your new payroll field is mapped to the appropriate box on the W-2. Click OK to save the field assignments.
  12. Depending on the type of deduction, you may need to assign fields for company-and employee-paid taxes. Click the buttons for each to see what is required.
  13. When you're done assigning fields, select Finish to close the Payroll Settings wizard and save your changes.

How it works

During payroll entry, if you subscribe to a plan that includes payroll, the employee's contribution will be automatically calculated and subtracted from gross pay before calculating and deducting federal and state payroll taxes. Otherwise, you will have to enter the amount for the employee in Maintain Employees or on the paycheck. The employee contribution amount will be recorded and tracked in the payroll field you set up.