FNSTPB402 Establish and Maintain Payroll Systems User Guide ISBN Number: 978-1-925782-92-9 Part Number: 402 Version: V18.5 2017 AUTHOR – Kerryn Maguire Kerryn has been working with accounting software products for over twenty years. Originally working from 1994 as an accountant with small business when accounting software became mainstream. Kerryn then focused on providing consulting and training services to small business in particular. Expanding from this into to providing curriculum based resources to TAFE and private RTOs. From this she established Microstar Publishing and more recently incorporated OfficeLink Learning to provide a wide range of resources for the Accounting and Business Services Certificate courses. Kerryn has a long association with many TAFEs and RTOs across Australia. Kerryn’s fundamental aim is to provide resources that are easy to understand while providing a practical application of skills acquired. Kerryn also co-authors two titles for Cambridge University Press which are in their 4 th Edition – first published in 2000. Kerryn has considerable experience and knowledge: Bachelor of Applied Science Mathematics Diploma of Education Graduate Diploma of Accounting CRI: Criterion Referenced Instruction Member of Institute of Certified Bookkeepers Member of VELG Reproduction and Communication for educational purposes The Australian Copyright Act 1968 (the Act) allows a maximum of one chapter or 10% of the pages of this publication, whichever is greater, to be reproduced and/or communicated by any educational institution for its educational purposes provided that the educational institution (or the body that administers it) has given remuneration notice to the Copyright Agency Limited (CAL) under the Act. For details of the CAL license for educational institutions contact: Copyright Agency Limited Level 15 233 Castlereagh Street Sydney NSW 2000 Telephone: (02) 9394 7600 Facsimile: (02) 9394 7601 Email: [email protected]Sample for Review
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FNSTPB402
Establish and Maintain Payroll Systems User Guide
ISBN Number: 978-1-925782-92-9
Part Number: 402
Version: V18.5 2017
AUTHOR – Kerryn Maguire Kerryn has been working with accounting software products for over twenty years. Originally working from 1994 as an accountant with small business when accounting software became mainstream. Kerryn then focused on providing consulting and training services to small business in particular. Expanding from this into to providing curriculum based resources to TAFE and private RTOs. From this she established Microstar Publishing and more recently incorporated OfficeLink Learning to provide a wide range of resources for the Accounting and Business Services Certificate courses. Kerryn has a long association with many TAFEs and RTOs across Australia. Kerryn’s fundamental aim is to provide resources that are easy to understand while providing a practical application of skills acquired. Kerryn also co-authors two titles for Cambridge University Press which are in their 4th Edition – first published in 2000. Kerryn has considerable experience and knowledge:
Bachelor of Applied Science Mathematics Diploma of Education Graduate Diploma of Accounting CRI: Criterion Referenced Instruction Member of Institute of Certified Bookkeepers Member of VELG
Reproduction and Communication for educational purposes The Australian Copyright Act 1968 (the Act) allows a maximum of one chapter or 10% of the pages of this publication, whichever is greater, to be reproduced and/or communicated by any educational institution for its educational purposes provided that the educational institution (or the body that administers it) has given remuneration notice to the Copyright Agency Limited (CAL) under the Act. For details of the CAL license for educational institutions contact:
In this user guide, you will be processing the pays for employees of Best Consultants Pty Ltd, a private company with Roger Cooper as the manager. The business is supported by three staff.
Before you begin exploring the Payroll Command Centre Before exploring the Payroll Command Centre, make sure you have a copy of the following file on your computer – see page 6.
Best Consultants v2017 2018.myox
Return to your desktop.
Exploring the Payroll Command Centre 1. Open MYOB AccountRight v2017.1 Student Edition by
double-clicking on the MYOB shortcut on your desktop.
3. Locate the AccountRight company file Best Consultants v2017 2018.myox found in C:\Documents\MYOB\My AccountRight Files\TPB402 or the location you have copied the file to.
4. Select Best Consultants v2017 2018.myox then Open
5. Sign on as Administrator and leave the Password blank
Checking the Payroll year on your company file Before processing any paycheques, you will check if the company file you are using is using the current payroll data.
1. Select Setup in the Menu Bar
2. Select Load Payroll Tax Tables.
3. Select Load Tax Tables.
4. Select Setup in the Menu Bar again and choose General Payroll Information.
Your window should look like this.
5. Note the date of the CURRENT PAYROLL YEAR it is
greyed out, but it is 2018.
6. Note the Tax Table Revision Date – in this book it is 1/07/2017 – if yours is later or earlier the results will be slightly different even though the process is the same
7. Click on OK to return to the Command Centre.
You could add a value of cents to round to if you are paying in cash. Leave it set to 0 for this example.
So that your printouts can be identified in the classroom, you will now enter your details. To enter your name:
1. Select Setup in the Menu Bar.
2. Select Company Information.
3. Click into the Address box
4. Type in your name Your Name and press ENTER
5. Type in any address and press TAB.
In this window, also check the Current Financial Year (different from the Payroll Year above). It should also be 2018. This is the year used to print financial reports.
All employees of Best Consultants Pty Ltd are working under the Clerks – Private Sector Award 2010.
@ Go to www.fairwork.gov.au, select ‘Awards and agreements’ and then ‘Awards’. Go to the ‘List of awards’ and find and download a copy of the Clerks – Private Sector Award 2010.
Please note this exercise is based on the version including amendments up to 21 June 2017.
When you are processing payroll, you must have a copy of the relevant award or agreement on hand.
Below and overleaf are extracts from the Clerks – Private Sector Award 2010.for you to read through, just to give you an idea of how award look.
Set out below are details of the four employees of Best Consultants
Pty Ltd.
Roger Cooper Business Manager Paid a Salary of $50,000 per year Roger has a HELP debt No overtime Paid Holiday, Personal Leave and LSL Asgard Super Fund Contributes $2 per pay to the Social Club Makes a $2 donation to the Cancer Appeal
Ann Wilson Receptionist Full-time employee - 38-hour week Classification: Level 2 - Year 1 Pay rate: $21.29 per hour ($809.10 per week) Paid overtime rates, meal allowance, shift allowance Entitled to holiday and personal leave plus LSL Sunsuper Fund Contributes $2 per pay to the Social Club Makes a $2 donation to the Cancer Appeal
Lorry Watts Bookkeeper Full-time employee - 38-hour week Classification: Level 3 Pay rate: $22.49 per hour ($854.60 per week) Paid overtime rates, meal allowance, shift allowance Paid car allowance for km clocked does banking, postage, etc. Entitled to holiday and personal leave plus LSL Sunsuper Fund Contributes $2 per pay to the Social Club Makes a $2 donation to the Cancer Appeal
Amber Jones Casual employee (usually 10 hours) Classification: Level 1 – Year 1 Pay rate: $24.30 per hour ($738.80 per week = $19.44 plus 25% loading) Amber is not paid any allowances Amber is not entitled to holiday or personal leave Amber is entitled to LSL Sunsuper Fund This is Amber’s 2nd job – so cannot claim Tax Free Threshold Makes a $2 donation to the Cancer Appeal
Wages Accounts in the Accounts List
The Accounts List (also known as Chart of Accounts) must provide appropriate accounts for wages:
• Expense Accounts - to record wages • Liability Accounts - to record deductions payable to the
Taxation Department, Superannuation Fund, Unions etc. • Bank Accounts - to track money paid for wages.
This company file already has employees and appropriate accounts set up.
1. Select the Accounts Command Centre.
2. Select Accounts List.
3. Click on the Expense tab.
Wages for Management and Wages for the Office are being tracked. Allowances (Car and Meal) are being tracked in separate accounts.
The following Liability Accounts have been created for wages. These accounts are for amounts still retained (from wages) by the business that are still owed e.g. PAYG tax to the ATO
Your Accounts List must also provide for a Bank Account from which wages are drawn.
5. Click on the Asset tab.
Your wages can be drawn from the following Bank Accounts.
6. Click on Close or press ESC to return to the Command Centre.
Accounts have been created to track the following: - PAYG Payable (Employee Income Tax) - Superannuation payments - Social Club - Cancer Appeal donations.
Wages can be paid by cheque from the NAB Cheque A/C, paid in cash from Undeposited Funds or a cashed cheque or paid electronically using the Electronic Payments A/C. In this workbook, wages will be paid by cash, cheque and electronic transfer.
The following window is displayed. Check that the Payment Method is Cash. If not, exit and correct the payment details on the employee card. The pays are calculated using the ‘standard pay’ details.
1. Click on the to the left of Roger Cooper to display the standard pay details. The following window is displayed.
Explanation: Base Salary = $50,000 divided by 52 weeks = $961.54 Holiday Leave Accrual = 152 divided by 52 = 2.923 Sick Leave Accrual = 76 divided by 52 = 1.462 Asgard Super = 9.5% of $961.54 = $91.35 PAYG Withholding as per PAYG Withholding Table 1/7/17, including Medicare Levy and HECS. Pay is being paid in Cash and taken from Payroll Clearing A/C.
2. Add Roger Cooper to the Memo field so that ‘Roger Cooper’ appears in the Memo the next time you process his pay.
1. Click on the to the left of Amber Jones to display the standard pay details. The following window is displayed.
The following window is displayed.
Explanation:
Amber is paid the 10 hours worked.
Amber cannot claim the Tax Free Threshold because this is her second job.
Amber is a casual employee and not entitled to sick or holiday entitlements.
Amber’s gross wages have not reached $450 this month; therefore, no super has been calculated. Superannuation will be calculated on monthly wages when $450 is reached.
4. Click on the to the left of Lorry Watts to display the standard pay details. The following window is displayed.
The pay is calculated using the standard pay. You will need to make an adjustment. Lorry worked one afternoon shift, so the business needs to pay her extra for these 8 hours.
According to the award an extra 15% on top of her ordinary rate is payable for an afternoon shift.
8 hours x $22.49 = $179.92 x 15% = $26.99
Add $26.99 to the pay cheque against the Shift Allowance category. Note that this changes the PAYG and super amounts.
1. After checking the accuracy of the payroll, select Record.
You will receive a message indicating the number of paycheques recorded successfully.
2. Select OK.
A cheque for the Net Wages will now be written out for $2401.17, taken to the bank and cashed (see overleaf for Cash Analysis Sheet). Wages will then be paid to employees in cash.
3. To record the above cheque, select Spend Money. Sample
On page 135, you used Spend Money to record the cheque to take to the bank to cash to pay the wages in cash.
1. You are required to write out the physical cheque printed below. (Please initial beside Pay Cash Only. You have permission to sign the cheque.)
2. You would now be required to complete a Cash Analysis Sheet (an example is shown below) to present to the bank with your cheque to inform the teller what denominations you require so that the correct number of notes and coins can be handed to each employee.
3. To reconcile the cash analysis:
a. Add the number of $50 notes required write it the Number line. b. Multiply the number of notes by the value of the notes, e.g.
15 × $50 and write the answer in Total B line. c. Add up all the amounts in Total B line. They should add up to
the total pay for the week.
Employee Name
$50
$20
$10
$5
$2
$1
50c
20c
10c 5c
Total A
Amber Jones
Ann Wilson
Lorry Watts
Roger Cooper
Number N/A
Total B
NOTE: We chose in our Setup preferences to leave our cent rounding to zero. When you are paying in cash, you may need to round to 5 cents. In this simulated environment, however, you may prefer your cash with your own rounding.
PRINTOUT 5 - Payroll Activity [Summary] Report – 7 March
This report is a summary of the four pays and a total of the Gross Wages, Deductions, Tax, Net Wages and Superannuation. These figures will be used later in this workbook to reconcile your payroll.
Print the Payroll Activity [Summary] report:
1. Select Reports Index to Reports in the Menu bar.
2. Click the Payroll tab.
3. Click on Activity Summary
4. Click into the Filter Report and enter the dates – in this case 7/03/2018 in the Dated From and the To box
5. Click on Display Report
6. Click on the Menu button at the top left of the Report window
7. Click on Print then Print again in the Print dialog box.
Your report should look like this.
8. Click on Close to close the Report window and return to the Command Centre.
A PAYMENT SUMMARY must be issued to each worker who has received payments under the PAYG withholding system, even if no tax has been withheld from the earnings. A Payment Summary cannot be issued to a partnership, company or trust.
There are four types of payment summary:
• The Individual Non-Business Payment Summary (covered in this User Guide)
• The Voluntary Agreement Payment Summary • The Labour Hire and Other Specified Payment
3. Your company details and contact details will be entered on the following screen. (Use the following approved state codes: ACT, NSW, NT, QLD, SA, VIC, TAS, and WA.)
The Set up the Payment Summary fields window is displayed.
On the left-hand side are listed the fields on the Payment Summary to contain the various totals for Gross Payments, Allowances, Lump Sum Payments, Deductions and Tax.
5. It is now your job to link the Payment Summary fields on the left with the Payroll Categories on the right-hand side of the window.
a. Click on Gross Payments on the left-hand side.
b. Now click on the payroll categories on the right side which are included in Gross Payments like this:
c. The Car Allowance is NOT INCLUDED in the Gross Payments. This amount will be shown beside Allowance 1.
(Overtime Meal Allowance is not included in W1 but may be shown on the payment summaries.
d. Select Allowance 1 on the left-hand side
e. Type CAR in the Description box
f. On the right-hand side, select Car Allowance. Your window will look like this.
Including this allowance would, if applicable, allow the employee to claim a deduction in his/her tax return. In our example, we have paid an award transport payment which is PAYG exempt anyway.
g. Allowance 2 will need to be set up for Meal Allowance.
h. Report the Work Place Giving – Cancer Appeal donation like this.
i. Click on Total Tax Withheld and check this box is
linked to PAYG Withholding.
6. Click on Next to view the Reportable Employer
Superannuation contribution screen.
Some superannuation contributions must be reported to the ATO for example RESC. To do this, link the reportable superannuation payroll categories to the assistant in this screen or manually type in the amounts in this screen against the relevant employee. (This is not for the normal 9.5% Superannuation guarantee)
In the next window, you enter Reportable Fringe Benefits.
If an employee’s ‘total fringe benefit amount in the FBT year (1 April to 31 March)’ exceeds $2,000.00, the amount must be ‘grossed-up’ regardless of whether you can or cannot claim a GST credit for the benefits provided. Use the lower gross up rate of 1.8868 for reporting on employees’ payment summaries.
NOTE: In practice if Section 57A applies to your business in practice just tick the box and an extra column is provided for you to enter values.
Remember to refer to Unit 2 for notes on Superannuation and Salary Sacrifice.
John Williams has negotiated a salary sacrifice arrangement now. He will sacrifice $200 a fortnight. Super Guarantee of 9.5% will be calculated on the gross earnings as per arrangement.
1. Ensure you are using the same file that you used in Unit 9.
2. In the Payroll Command Centre, select Payroll Categories.
3. Select the Superannuation tab.
4. Click on the New button
5. Click on the Contribution Type and click on Salary Sacrifice.
6. Click into the Superannuation name and type Salary Sacrifice J Williams
7. Click on the Linked Payable Account droplist button and click on 2-4200 Sunsuper Payable
8. Click on the Equals option and type 200 in the $ amount box:
9. Click on Employee button and select John Williams.
10. Click on OK and Close to return to the Command Centre.
Reporting wages on the Business Activity Statement
When reporting Wages in W1 on the BAS or IAS Statements, you must remember to exclude Salary Sacrifice in the same manner as on the Payment Summary. MYOB software requires that Salary Sacrifice is selected in this screen. It will then subtract the amount from the total W1.
Long Service Leave accrual Carol Wall is entitled to 0.866 weeks long service leave accrual for each year worked, payable after 7 years. She has been employed for 7 years and 6 months as of 12 May 2018.
Calculation - hours per week to be accrued: 0.866 weeks per year = 38 × 0.866 = 32.9 hours per year
Per pay period: 52
32.9 weeks = 0.63269 × 2 weeks
= 1.265 hours (per fortnightly pay)
Or as a percentage (used for permanent part-time or perhaps long-term casual – refer to Long Service Leave rules for your State/Territory).
Calculation: 38529.32
× × 100 = 1.665% of Gross Hours
Note this is just an example – you will need to seek assistance in the workplace.
To set up Long Service Leave accrual in AccountRight:
1. In the Payroll Command Centre, select Payroll Categories.
2. Select Entitlements.
3. Click on New to create an entitlement for Long Service Leave.
4. Set up the following for salaried employees. (This could also be used for full-time hourly employees, but not part-time.)
5. Click on the Employee button and click on Carol Wall and OK to attach this entitlement to Carol Wall and ensure the wage category Long Service Leave is linked to Carol.
Note: The following screen shows the setup that you would use for part-time/casual employees. (Special rules apply for casual employees.)
You will need to exempt all non-based hourly wages.
7. Go to the card for Carol Wall and add the entitlement balance of 247 to her Long Service Leave Accrual field in the Carry Over column. This is the amount only up to 12/5/18. Normally you would need to calculate up to your current month of processing.
8. It has also been identified that Carol is missing 80 hours of Carry Over entitlement of Annual Leave Accrual – Salary so type 80 hours in that row as well
In this case study, Carol is entitled to LSL after she has worked ten years and the entitlement is calculated from the date of her employment. We have calculated one year’s entitlement to be 32.9 hours, so Carol’s entitlement is 247 hours for the 7 years and 6 months she has served.
9. Return to the Command Centre.
10. You now need to process Carol’s pay for the fortnight as below but do not process the electronic payments – just click on Record and Close
11. Return to the Command Centre.
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Appendix A - FNSTPB402 Elements of Competency and Performance Criteria
1.1 Assess scope of payroll services that a business activity statement (BAS) agent can provide, and identify need for independent expert advice
Unit 2
1.2 Apply knowledge of legislation in relation to National Employment Standards, and legislative requirements in regard to payroll payments
Unit 2
1.3 Research and identify relevant to relevant state and modern awards, and employee agreements, regarding details to be set up in payroll system for individual employees
Unit 2
2 Record payroll data
2.1 Configure payroll system with complete data provided by employee and employer
Units 3, 4, 7 & 10
2.2 Review payroll data and clarify discrepancies with designated persons
Units 4, 7 & 10
2.3 Enter employee pay period details in payroll system in line with source data
Units 4, 7, 8 & 10
3 Prepare and process payroll
3.1 Conduct payroll preparation within designated timeframes and according to organisational policies and procedures
Units 4, 7, 8 & 10
3.2 Use employee source data to calculate, record and reconcile payroll according to legislative requirements
Units 2, 4, 7-10
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Appendix A - FNSTPB402 Elements of Competency and Performance Criteria
3.3 Reconcile total payments for pay period and review and correct irregularities or refer them to designated persons for resolution
Units 4, 5, 7, 8 & 10
3.4 Obtain authorisation of payroll and make arrangements for individuals’ payments in line with organisational requirements
Units 4, 7, 8 & 10
3.5 Distribute individual pay advice according to organisational and legislative requirements
Units 4, 5, 7, 8 & 10
3.6 Identify legislative and organisational requirements relevant to employment termination processes and payment, and seek advice to interpret requirements as required
Unit 2, 10
3.7 Produce, review and store payroll according to organisational policy and security procedures
Units 1, 4, 7, 8 & 10
4 Handle payroll enquiries
4.1 Respond to payroll enquiries according to organisational and legislative requirements.
Units 4, 7 & 10
4.2 Provide information provided according to organisational and legislative requirements.
Units 4, 7 & 10
4.3 Refer enquiries outside area of responsibility or knowledge to designated persons for resolution.
Units 4, 7 & 10
4.4 Provide additional information or follow-up action within designated timelines and according to organisational policy and procedures.
Units 4, 7 & 10
5 Maintain payroll
5.1 Maintain information and record keeping relating to payroll function according to current legislation and regulatory requirements.
Units 2 & 10
5.2 Prepare and reconcile month-end and year-end payroll records to ensure compliance with legislative and management deadlines.
Units 5, 6 & 10
5.3 Update records and systems in line with salary reviews and other changes in employment status.
Unit 3, 7 & 10
5.4 Establish back-up and disaster recovery systems. Units 1 & 10
5.5 Generate and distribute payroll reports in line with organisational policy.
All units
5.6 Extract and apply BAS and instalment activity statement (IAS) data according to legislation and regulatory requirements.