Payroll Entries

Question

Hi, have never used the payroll function in sage for very long. I want to confirm how to deal with the payroll entries specifically with relation to benefits. I cannot find an answer. 
 We enter the paycheck into Sage and then we pay it online manually through the bank not through Sage. 
 Journal entry example: Wages 3000 CPP Expense 180 EI Expense 75 Cash 2200 CPP Payable 360 EI Payable 105 Income Taxes Payable 500 Benefits Payable 90 
 
 We also recorded the automated transaction at the beginning of the month of the benefits for the month as Dr. Benefits Expense and Cr. Cash 
 The benefits are a 60/40 split 
 How do we adjust for the benefits payable? How do we account for the employee and employer portion? Should we set up a prepaid account? 
 Currently the employee benefit in the payroll journal entry is going into a benefits clearing account. Do I need to change the linked account to a the benefits expense account that the benefits expense account will be reduced on the employee portion? 
 Please give examples of journal entries.

Erzsi_I · Answer

Hi Kari Len , 
 Thank you for reaching out and apologies for the delayed response. From the information provided, it appears you are handling payroll entries manually and are inquiring about distributing benefits, specifically with a 60/40 allocation, and how to adjust the payable benefits accordingly. 
 Here's how you can deal with the benefits as per the Sage Knowledgebase:

Creating a New Benefit : 
 
 Go to Setup > Settings > Payroll > Incomes. 
 Change the income type to 'Benefit' and select the appropriate taxes. 
 Link the new benefit to the wages account or another expense account from Setup > Settings > Payroll > Linked Accounts > Incomes.

For Employee and Employer Portions : 
 
 You will also need to set up an employer expense account for the employer's portion of the benefits. 
 Go to Setup > Settings > Payroll > Other Expenses and set up the employer's additional contribution.

Automated Transactions : 
 
 You can set automated transactions for the beginning of the month for the employer&rsquo;s portion by defining it in the User-defined Expenses section and linking the appropriate accounts.

For your journal entry concerns, here&rsquo;s how it could look like considering the 60/40 split: 
 
 For the employee portion (60%), it would typically be recorded as a benefit deduction from their payroll. 
 For the employer portion (40%), it will be recorded as an expense on the employer's side, affecting your expenses and liabilities accounts. 
 
 For a detailed guide on setting up group benefits, like RRSP or MSP, you can refer to the second article you've mentioned, which provides step-by-step instructions on creating these types of benefits and linking them to the appropriate accounts. 
 It's important to tailor these steps to your specific 60/40 split scenario and make sure that both employee and employer contributions are recorded accurately. If the benefits expense account is being affected differently, you may need to adjust the linked account or the manner in which the entry is being recorded to reflect the true nature of the transactions. 
 You can find detailed guidance and illustrations in the articles below: 
 
 How to create a new payroll benefit 
 How do I create group benefits, such as a Group RRSP, MSP? 
 
 Hope this helps! If it does, please mark it as verified :) 
 Warm Regards, Erzsi

Sage 50 Canada

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