The Type field on the Earning/Deduction Codes window lets you specify a sub-classification of an earnings/deduction. The selections that display for Type field depend upon your entry at the Category field. (The categories Deduction and Expense Reimbursement have no type.)
Benefit Types (cash and noncash)
- A cash benefit increases the employee's net pay.
- A noncash benefit (for example, use of a company automobile) does not increase net pay but may be taxable as income. When you set up a noncash benefit, you can choose to post amounts for it to expense and employer liability accounts or not to post amounts for it at all.
Advance Types (cash and noncash)
- A cash advance is an amount of money paid in advance to an employee, who is expected to repay the advance.
- A noncash advance is goods or services (for example, supplying uniforms or tools), also in expectation of repayment.
In Sage HRMS Payroll, the earning/deduction category Advance (either cash or noncash) is not taxable. To give an employee an advance against future earnings that you want taxed at source, set the advance up as an earning/deduction with the category Earning.
Earnings Types (salary & wages, reported tips, and allocated tips)
- To set up an earning that tracks the amounts that employees earn in salary and wages, select the category of Earnings and the Type of Salary & Wages.
- To set up an earning that tracks the amounts that employees report in tips, select the category Earnings and the Type of Reported Tips and assign it to the employee. For Quebec employees, you should also create an earning with the type Allocated Tips and assign it to the employee.
- To set up an earning that reports allocated tips on the Form W-2, select the category Earnings and the type Allocated Tips. (You can provide the allocated tips amount either through timecard entry or by entering the amount in Transaction History at Year-End.)
Accrual Types (vacation, sick, compensatory/banked time)
- You determine a base for the accrual of vacation time and sick time. Banked time can be accrued in payment for overtime hours worked.
- In the Link Accrual Earning field, you can enter the specific earning on which the sick or vacation accrual is based. Sage HRMS Payroll then uses this earning to calculate sick or vacation pay on timecards.
- Compensatory time can be accrued in payment for overtime hours worked.
Allocated tips
In the context of tips earned by Quebec employees, an allocated tip is an amount that is added to an employee’s reported tips earnings, if those reported tips are less than a required amount. The required amount is determined by a rate set by the Quebec government.
For example, the Quebec government specifies that reported tips must be at least 8 percent of an employee’s reported tippable sales.
Note: Tippable sales mean the sales amount on which tips are collected.
If the employee reports tippable sales of $1,000 but reports only $70 of tips, then $10 must be allocated (added) to the reported $70 tips. This ensures that taxes are calculated on $80 (8 percent of $1,000) instead of $70.
After your Sage HRMS Payroll system is properly configured, Sage HRMS Payroll automatically calculates the allocated tips amount when you enter tippable sales and reported tips on the Timecards window.