Do you have business clients who have employees they need to pay? Well, of course you do! For many business owners, payroll can be one of the more daunting (and time-consuming) tasks they’re required to do in order to run a business. Many times, that’s where you, their accountant and most trusted business and financial advisor, come in to save the day! In this article, I’ll show you how to set up and run payroll in Sage 50. In a second article I’ll go deeper and explain the ins and outs of electronic payroll filing and how you can integrate Sage Payroll into Sage 50.
I’ve helped dozens of my Sage 50 clients with its payroll capabilities, so I consider myself something of an expert on how to set up and run payroll within Sage 50. There are a few “tricks of the trade” that I’ve learned over time, so throughout this post I’ll not only walk you through the “how-to’s” when it comes to setting up and running Sage 50 payroll, but I’ll also give you some insider information on how to do things best for you and your clients. So, let’s get started!
Setting up Payroll in Sage 50
If your clients are running Sage 50, they may not know exactly where to start when it comes to using its payroll capabilities. They’ll come to you for advice on how to get started. No problem! Lucky for you, Sage 50 has a handy Payroll Setup Wizard that you can use to set up payroll in just a few quick minutes.
The Payroll Setup Wizard walks you through entering your client’s company information, benefits, and taxes. You’ll do things like:
- Enter your client’s company information, such as their Federal and State Employer IDs, Pay types, and other settings.
- Set up benefits, including vacation, sick time, insurance plans, retirement, FSAs, and other options.
- Set up tax options, such as GL accounts for the taxes your client collects.
The wizard is pretty simple to navigate. However, one thing you’ll want to do before entering the wizard is to have as much information available about your client as possible.
Handy Tip #1: Have your client’s basic company information, such as Federal Employer ID, State Employers ID, State Unemployment ID, and other similar types of information available when you start the wizard.
As you go through the wizard, enter the information that is required. That way, you can get it all in from the start and won’t have to go in later to fill out areas you may have left blank.
Handy Tip #2: Use the Save for Later button if you need to go back and enter more information later.
The benefits offered to employees is one of the next areas covered during the Payroll Setup Wizard.
For the benefits area, this might be something you need to have your client present to help with.
Handy Tip #3: Your client knows the ins and outs of the benefits offered to employees, so have your client (or their benefits expert) present when completing the Benefits portion of the wizard.
The options covered in the benefits area include:
- Sick time
- Insurance plans
- Retirement plans
- Flexible Spending Accounts (FSAs)
As most employees do not have the same exact benefits, you can change the amounts on each employee’s record later. So, for now, enter in the most common amounts that apply to all employees.
Next, within the taxes section, you’ll need to select the accounts you set up to track your client’s payroll tax expenses as well as how much tax your client owes. If you haven’t already figured it out in the above steps, you really need to think through your chart of accounts during these steps. Nowhere does this seem more important than in the taxes section.
I can’t tell you how many times I’ve see payroll set up so that all of the activity for any kind of payroll transaction goes into two accounts—“payroll tax payable” and “payroll tax expense” (pretty much like the sample company in the next screen shot). I always want to scream “WHAT IS THAT??!!” Well, I know what it is. It’s people having no idea how to set up their payroll accounts, or not having the desire to set it up, or not even knowing they can set it up—so they use whatever is the default in the program.
If you set up your payroll accounts correctly, your income statement and balance sheet will always reflect the proper accruals and expenses so that you know exactly how much your liabilities are and what you have paid to date. This starts with a good chart of accounts. Really think through your chart of accounts and choose how much detail you want for each tax/payroll liability and expense.