What is an EIN (FEIN)?
EIN stands for Employer Identification Number. The IRS assigns an EIN to identify a business on different tax documents. Like a Social Security number, an EIN is a taxpayer identification number. When you become an employer, you need to apply for an EIN. You can obtain an EIN by applying online or faxing/mailing Form SS-4 to the IRS.
What’s the difference between exempt or non-exempt employee?
Exempt employees must meet three “tests” to be considered exempt. These tests are based on Salary Level, Salary Basis, and Job Duties. Greater details are available at https://www.dol.gov/whd/overtime/fs17a_overview.htm.
Salary Level: An employee must make at least $455 weekly ($23,660 annually.)
Salary Basis: An employee must regularly receive a predetermined amount of compensation each pay period and it cannot be reduced because of variations in quality or quantity of work performed.
Job Duties: There are five classifications to examine job duties when considering Exempt or Non-Exempt status.
- Executive Exempt Job Duties: Be sure to check out DOL’s Fact Sheet #17B for more details. Primary duties are management of a business or a recognized department of the business; customarily and regularly directs the work of at least two or more full employees; and has the authority to hire and fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other changes related to employees are given particular weight.
- Administrative Exempt Job Duties: Be sure to check out DOL’s Fact Sheet #17C for more details. Primary duty is the performance of office or non-manual work directly related to the management or general business operations AND whose primary duties include the exercise of discretion and independent judgment with respect to matters of significance. (Examples: tax, finance, accounting, budgeting, auditing , insurance, quality control, purchasing, advertising, marketing, research, safety & health, HR, public relations, legal and regulatory compliance.)
- Professional Exempt Job Duties: Be sure to check out DOL’s Fact Sheet #17D for more details. Primary duty is the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction. (Examples are lawyers, teachers, accountants, pharmacists, engineers, actuaries, chefs, certified athletic trainers, licensed funeral directors or embalmers.) Also considered within the Professional Exemption is the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor. (Examples are musicians, composers, conductors, novelists, screen writers, actors, painters, and photographers.)
Computer-Related Exempt Job Duties: Be sure to check out DOL’s Fact Sheet #17E for more details. The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the following primary duties:
- Application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
- Design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specification;
- Design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
- A combination of the aforementioned duties, the performance of which requires the same level of skills.
Outside Sales Exempt Job Duties: Be sure to check out DOL’s Fact Sheet #17F for more details. Primary duty must be making sales as defined in the Fair Labor Standard Act (see below), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and the employee must be customarily and regularly engaged away from the employer’s place or places of business.
- Sales include any sale, exchange, contract to sell, consignment for sales, shipment for sale, or other disposition. It includes the transfer of title to tangible property, and in certain cases, of tangible and valuable evidences of intangible property.
- The salary requirements of the regulation do not apply to the outside sales exemption.
What is OASDI on the employee’s check stub? OASDI stands for Old Age Survivors Disability Insurance which is also known as Social Security Tax.
Does Vacation time count toward overtime calculation? Overtime is based on hours worked over 40 in a week or over 8 hours in a day (depending on the industry) so vacation will not be included in overtime.
What is Supplemental pay? Supplemental pay is wages paid to an employee in addition to regular wages….such as bonuses, commission or severance pay.
What taxes do I need to withhold from an employee’s paycheck?
As the employer, you must withhold federal income, Social Security, and Medicare taxes. You might also need to withhold state and local income taxes depending on the state(s) tax code your employees reside and/or work. Both federal and state unemployment taxes are generally paid based on your business legal entity.
Federal income tax is determined by an employee’s Form W-4 and the tax brackets which are outlined in Publication 15 (Circular E). Social Security and Medicare taxes make up FICA tax. FICA tax is a total 7.65% of an employee’s pay. You, as the employer, will make a matching employer contribution of 7.65% for each of your employees. This is a total of 15.3% paid by employee and employer.
Social Security tax, 6.2%, should be withheld until you reach the Social Security wage base which for 2018 is $128,400. There is no wage base limits for the Medicare portion of FICA which is 1.45%. However, an additional Medicare surtax is applied (.9% for 2018) once wages exceed a specific amount (for 2018 the wage limit of $200,000 or $250,000 for married couples.)
What taxes do I need to deduct from my income?
As an employer, your taxes depend on your business structure. If you are incorporated and receive a salary, payroll and income taxes are deducted from your gross wages. If you are self-employed, you do not receive a salary, but pay taxes on your income. Instead of FICA tax, you pay self-employment tax. The self-employment tax is the entire 15.3% for Social Security and Medicare taxes.
In addition to the self-employment tax, you will pay income tax. Self-employed individuals pay estimated taxes, usually on a quarterly basis, which include both self-employment and income taxes.
What is unemployment tax?
Unemployment taxes are assessed at the federal and state level. As an employer, you are responsible for paying FUTA (Federal Unemployment Tax Act) and SUTA (state unemployment). Generally, no unemployment taxes are withheld from employee’s wages.
The FUTA tax rate is 6%, but most employers only pay 0.6% due to a tax credit. Over the last several years, the federal government has denied the tax credit reduction for some states who failed to repay loans. This action will impact (increase) the businesses unemployment rates operating in those states. The good news is the employer only pays FUTA tax on the first $7,000 of wages for each employee. Your state determines the employer’s individual SUTA tax rate and wage limits. You must register with your state unemployment agency when you hire your first employee. The state will assign you a SUTA account and inform you of the SUTA tax rate assigned to your company annually.
How do I change the employee’s rate of pay in the payroll software for a specific employee?
Go to the “Employee Setup” icon which should be under your “Favorite” drawer and select the employee needing to change. Go to the “Rate 1” and enter the new hourly rate. There will be a pop-up screen asking for the effective date of the entered rate of pay. Please note: the system does not calculate the retroactive pay of a payroll change for previous pay periods. This type of calculation will need to be completed manually so we can make sure the employee receives the appropriate pay.
When changing the salary amount for an exempt employee, be sure to calculate the amount for the pay frequency (such as $2000 biweekly). You will need to add an effective date for the salary. If an employee receives multiple rates of pay, be sure to change the rates under the “Auto Pay” tab found within the Employee Setup icon. Highlight the pay requiring change and enter the new rate in the “default rate” and a 0 (zero) in the dollar amount. If you need to change the set dollar amount of pay, make the change under the “default amount” and be sure to place a 0 (zero) in the default rate.
How do I add additional pay earnings or deduction codes to my company?
Addition of earnings or deductions need to be setup within the system from the service bureau side. Contact your assigned Payroll Account Representative and he/she will add the earnings or deduction codes for you.
How do I add a new deduction to an employee?
Go to the “Employee Setup” icon which should be under your “Favorite” drawer and select the employee which needs the deduction added. Select the tab titled “Auto Deductions.” Select the “Add” button . Click in the cell named “Deduction #”. Select the drop down menu and choose the appropriate deduction to add. Enter or Tab to the cell named Ded. Calc. The calculation which appears is the default, for instance, Fixed Amount or Percent of Gross. Select the appropriate calculation format. Within the cell named “Scheduled Amt”, place the per payroll amount to be deducted. Be sure to “Save” this change by clicking on the “Save” button at the top of the screen.
How do I change the frequency of the deduction?
Contact your Payroll Account Representative for the frequency to be changed permanently. For a one-time reduction of the deduction, go to the Payroll Detail screen and remove it from the employee’s check.
How do I withhold extra federal withholding on an employee?
On the Basic Tab Info on the employee you will want to enter the amount in the Extra Fed. W/H box. Example: Extra $10.00 you would key 10, Extra 2% you would key .02.
Tip: Numbers before the decimal are dollars and numbers after a decimal is a percentage.
How do I add a direct deposit for an employee?
You can add a direct deposit to an employee by selecting the “Employee Setup” icon. Go to the “Direct Deposit” tab. An employee may have up to four accounts with the last column being the default account. Specify if the account is a check or savings within the first cell by utilizing the drop-down menu. Enter the nine digit bank routing number of the employee’s bank within the routing number cell. Enter the employee account number. The Split method will either be a flat dollar amount or a percentage of their check. Put in the amount or percentage in the “Amount”. If it is a percentage, just put in the percent and the system will calculate it for you when processing the pay. Then select “Active”.
Be sure to complete all “Flat” amounts prior to the “Percentage” amounts. The percentage represents where the net balance will be deposited. For example, if your employee makes a net of $500 and wants a flat amount of $50 to go into a savings account, the last transaction on the Direct Deposit tab would be 100% percent going to the account which will receive the balance of $450. If you like to check to see if the account is correct, you can select “Pre-Note” instead of “Active”. Please note: a pre-note can take up to 4 weeks to get confirmation from the bank and the employee will continue to receive a check until it is received.
How do I add a message to all of my employees on the paycheck stubs?
If you want to add the same message to every employee’s paycheck, when you start a “New Payroll” go to the “Memo” section on the first screen. When adding the message, keep in mind this field allows a maximum of 150 characters. Be sure the message abides by the FLSA and all employment laws and policies and procedures of your company since it will be printed on a company document. Please be sure to remove it on the next payroll unless you would like for it to be printed again. The message doesn’t go away on future paystubs until you remove it from the “Memo” box.
If you need a message to appear on a selected employees or only one employee, go to the “Employee Setup” icon and choose the “HR QuickView” tab. Go to the “Employee Check Memo” cell found at the bottom left side of the screen and type your message. You may add an expiration date for the message or you select “Always Display” to keep it on the paystubs. Be sure the message complies with all employment laws and regulations along with your company’s policies and procedures since it will be printed on a company document. You can always remove the message by highlighted is within the cell and delete it.
Once I have completed my powergrid and processed it, can I go back into the powergrid and change it?
You will not be able to go back into the powergrid to make changes once it has been processed. You can make the appropriate changes in “Payroll Details” section. This section shows the individual checks for each employee. It can be accessed by selecting the “Edit Payroll” icon and choose “Payroll Detail” icon at the bottom right portion of the screen. The document appearing is a blank check. Click within the employee number and type in the employee number identification you wish to revise. If you do not know the employee number, double click in the cell for the employee number which allows you to search the employees. Once the employee’s check appears, make the required changes or add or delete the existing items on the check. To calculate the check, be sure you select the * key on the number pad and NOT the * above the 8 key on your keyboard.
Why is a new employee not showing up on the powergrid?
There could be several reasons a new employee is not showing up on the powergrid. If you set up an employee after you have started the powergrid, it will not show up on the grid. If the employee’s information has been entered into the online solution after you opened the powergrid, you can enter a new row in the powergrid for the new employee. Once you are in the powergrid, click in the far left side within the small empty box on any line. Select “Add new row for Employee”. Enter the employee number and tab over to the hourly rate. The information should auto fill for this employee if you have selected the correct employee number. Complete the powergrid information for this employee.
Another reason the employee may not be on the powergrid is that an hourly or salaried amount has not been entered in the employee setup under the “Rate 1” or “Salary”. Once you enter the rate under the “Employee Setup” and “General” tab, the employee’s information will appear on the next pay period’s powergrid. If you need to add hours for the employee before the next pay period, go to “Edit Payroll” icon and choose “Payroll Detail” icon at the bottom right portion of the screen. The document appearing is a blank check. Click within the employee number and type in the employee number identification you wish to revise. If you do not know the employee number, double click in the cell for the employee number which allows you to search the employees. Once the employee’s check appears, make the required changes or add or delete the existing items on the check. To calculate the check, be sure you select the * key on the number pad and NOT the * above the 8 key on your keyboard.
If you have multiple rates set up for the employee in the “Auto Pays”, be sure to place the default rate in “Rate 1” on the “General” tab (for example, vacation rate of pay). This default rate will be assigned to any hours not specified under the “Auto Pays.”
Where can I get copies of W-2s?
Go to the “Report Library” icon. At the top of the page, select the tab titled “Period End Reports.” The most recent W-2s will be with the 4th quarter reports. Selected the report called Federal W2 EE Copy (4UP) and preview the report. It will pull up a PDF file of all the W-2s. If you need the forms from two years ago, be sure to select the “Two Years” where it would normally state “One Year”.
Where can I get direct deposit voucher copies?
If the vouchers were emailed through the system, go the “Report Library” icon and change the tab to “Distributed Paystubs”. Scroll down to find the check date and employee that you need. Right click to preview or print the voucher in a PDF file. If the direct deposit vouchers were mailed or UPS’d to you, go to “Report Library” and select the report named Direct Deposit Vouchers. Highlight the report and right click to preview or print the voucher needed.
I need an earnings report for an employee. Where can I find it?
Go the “Report Browser” icon and change the category in the upper left from “Payroll Reports” to “Employee Reports”. To run the report that shows individual pay check details, click Employee Detail Earnings report. To the left of the screen midway, there are several pieces of information required to complete the report. Enter the “To” and “From” dates needed for the report. Your company number will automatically fill in unless you have multiple companies assigned to the admin login for the online payroll solution. Enter the employee number in both the “Enter Employee #” and “Enter Max Employee #” fields for one specific report. Or use “1” in the first field and “9999” in the second employee number field to pull information for the entire organization. Use the same steps to access the Employee Summary Earnings report.
How do I add a separate check for the same employee?
If using the “Payroll Details” when entering employee pay information, go to the “Payroll Detail” icon. Pull up the employee’s details by entering their employee number or performing a search. Click on “New Check-same Employee” within the information bar at the top of the screen. You can run your curser over the icons and the function of each icon appears. Enter the second check’s information, recalculate by selecting the * (on the keypad of the keyboard) or by pressing the enter key through the screen. At the top of the page and approximately in the middle, the information should show 2/2 – meaning the 2nd check out of 2 checks.
How do I see/open my email with my paystub attached?
When you click on the attachment it will ask for a password. The password is the first 3 letters of the last name of the employee and with the 1st letter capitalized and then the last four of the employee’s social security number. (ex. Smi1234)
I entered a new hire but it is not taking out local tax and I entered the county. What is wrong?
The county local default position has not been marked. Go to the “Employee Setup” icon and select the “Local Tax Info” tab. Click on the bubble next to the “1” in the local default position. This action will fill in the “Default Local WH 1:” at the bottom right of the page and will prompt the system to withhold at the proper rate.
When should I use the 3 different rates on the employee’s general tab?
The only time the three rates should be entered is if you are using the “Payroll Detail” method of time entry. During PAYROLL DETAIL ENTRY, you have an option to use the rate-column’s up and down arrow keys to cycle through the different rates.
How do I pay an employee a specific rate for an additional earning code? Example: $2.00/hr On-Call
You will need to assign an Employee Auto Pay. Under the “Employee Setup” icon, select the “Auto Pays” tab. Select the Add button . Select the appropriate earning code, such as On-Call, Amount 0.00, Default Rate will be $2.00. Be sure to “Save” the information at the top of the screen. When inputting the time on the powergrid under the Earning Code column, such as On-Call, the $2.00 rate will be assigned to the hours entered.
How do I see the total earnings by category prior to submitting?
After processing your powergrid, select the “Payroll Total” button. At the top of the dialogue box, you can select “Pay/Ded/Memo Totals” tab. Select the Earnings or Deduction category to review and verify your amounts.
How do I determine if an employee is full-time or part-time for ACA compliance and how do I mark it in the payroll system?
The Affordable Care Act’s definition of a full-time employee is one that works 30 or more hours per week or 130 hours per month. An Applicable Large Employer (ALE) is identified as an employer with 50 or more full-time equivalents (FTEs). For an ALE, the employee working at or over the 30 hours per week/130 hours per month standard should be offered minimum essential coverage not to exceed the affordability standard. Penalties may apply for the ALE who does not.
The online system tracks the full-time or part-time status for the ACA reporting requirements. To accomplish this within the system, go to the “Employee Setup” icon and the “General” tab. Go to the “ACA Status” cell at the bottom right portion of the screen and make the employee full-time or part-time. You will be asked to enter an effective date, use the hire date or the date when the employee changed from one status to another.
How does the system track an employee who has no healthcare deduction because the employer pays the entire cost of the employee only option for the ACA reporting?
There are a several options to handle this scenario. The first option is to have us set up a healthcare deduction with a $0.00 amount. For those employees who do not pay for any portion of their healthcare, you would select the $0.00 option in the deduction. This option allows the system to continue tracking the healthcare coverage for the ACA reporting requirement of the 1095-C.
The second option is to use the “ACA Monitor” module “Event” function. This module is only available for the ALE who have engaged Kemper 1st Choice Payroll to generate the 1095-Cs for their employees. Before you begin this option, go to the Auto Deduction section and identify the deduction number assigned to the healthcare deduction. You will need to enter this number in this setup sequence.
To set up the employee for healthcare coverage, go to the “Employee Setup” icon and pull up the employee who needs to have a healthcare deduction tracked in the system. After the employee’s information is set up, go to the “Events” icon under your favorite drawer. Select “New” tab at the top of the screen. A line will appear with the employee’s information. Click inside the cell titled “Event” and select ACA Deduction. Enter the start date of the deduction and leave the end date blank if there is no end date to report. Under the “Details/Notes” column, enter the company’s healthcare deduction number. Select “Save” at the top of the page to register this entry. The “Event” means the employee is eligible and was offered coverage and will populate the 1095-C with healthcare coverage.
We are an Applicable Large Employer and must provide a 1095-C to our employees at the end of the year. How do we track the employees who declines healthcare coverage?
Before you begin this option, go to the Auto Deduction section and identify the deduction number assigned to the healthcare deduction. You will need to enter this number in this setup sequence.
If the employee opts out of coverage for the year, go to “Employee Setup” and select the appropriate employee who has declined healthcare coverage. Once the employee’s information appears, go to the “Event” icon in your favorite. Select “New” tab at the top of the screen. A line will appear with the employee’s information. Click inside the cell titled “Event” and select “ACA Declined Coverage”. Enter the declination date of the deduction and leave the end date blank if there is no end date to report. Under the “Details/Notes” column, enter the company’s healthcare deduction number. Select “Save” at the top of the page to register this entry. The “Event” function will populate the 1095-C with the declination appropriately.
What is the calculation the system uses for the average hours for ACA within the ACA Monitor?
The calculation is as follows. It first figures out the number of weeks in the lookback period on the top on the ACA monitor. This is usually the same as the measurement period. It can be changed however if needed. Once it has the number of weeks, it gets the total number of hours for the employee in that lookback period. It then divides the hours by the weeks. This is the average hours displayed.