21st Century Accounting Help - Payroll/Configure

Taxes

Use the Payroll/Configure/Taxes window to set up system-defined Payroll taxes. 21st Century Accounting supports system-defined taxes by issuing tax updates whenever tax authorities change the calculation tables. The 21st Century Accountingl shorthand term for all types of taxes is "pay factors."

Configuring taxes

When you choose <new> to set up a new tax, the selector lists shows all the federal, state, and local income and unemployment insurance taxes that 21st Century Accounting supports. You configure only the taxes you need in the company or companies for which you run Payroll.

Most Payroll taxes require little configuration, since the calculation formulas are set by the tax laws. You indicate your tax reporting ID and the authority to whom you will remit the taxes you accumulate.

(You can edit the maximum taxable earnings for some system taxes, such as state unemployment taxes in the Configure/Tax Calculations window.)

For all pay factors that are posted to the general ledger, you select the expense and liability accounts, as appropriate, for posting the factors.

You also select the option whether to post each tax to employees' departments.

To edit the current tax liability

To edit the current liability amount for a tax, right-click on the "Current liability" field and select "Override current liability" from the options menu. Enter the outstanding liability from your records and press the Tab key.
This modifiable field allows you to synchronize the Print/Remittance Checks function with your current records.

Assigning taxes to employees.

Only the taxes that you configure are available for assignment to employees. Configuring taxes also gives you the opportunity to auto-assign certain taxes (such as federal income tax, Social Security, and Medicare, for example) to all employees. You can also assign taxes to (and remove them from) selected employees in the Payroll/Configure/Employees window, where you also customize taxes for individual employees, if necessary.

Posting taxes

The system calculates and withholds the tax amount from an employee's gross pay when you process Payroll for the employee and posts the tax along with any employer contribution to the general ledger accounts assigned to the tax.
If you select the option for departmentalization by G/L account segment in Payroll/Configure/Company Information, the expense and liability accounts you assign to pay factors that post to the general ledger (incomes, deductions, and taxes) are the "default" posting accounts. You then have the option to departmentalize each factor (or not). When you actually post paychecks using departmentalization, the system substitutes each employee's assigned department value for the department segment value in each factor's default account and posts expenses and liabilities for each employee to the accounts that are based on the employee's assigned departments.

If the company is configured to departmentalize pay factors by account segment and to allow manual distribution, and taxes are configured to post to the employee's departments, when you process Payroll, you specify departments as well as G/L accounts in the manual distribution window. The system then distributes taxes to departments in the same proportions as you distribute earnings.