Manual Payroll Provides Alternative to Payroll Subscription

By David H. Ringstrom, CPA

One of the best features of Microsoft Office Accounting is its direct integration with ADP’s payroll services. As I’ve written before, this functionality offers three tiers of subscription-based service. This enables your clients to choose from tax-tables-only to full-service, outsourced payroll. However, I’m sure you have a cadre of clients that loathe paying even a penny for payroll assistance. Fortunately, there’s a feature designed just for these frugal folks: manual payroll in Office Accounting 2008.

Professional Required: Microsoft Office Accounting Express or Standard users must upgrade to Office Accounting Professional to use the manual payroll feature discussed in this article.

Manual Payroll

Office Accounting’s manual payroll feature uses an integrated Excel spreadsheet to perform the payroll calculations. The resulting transactions are then posted to Office Accounting . Users can then print paychecks from Office Accounting, and pay stubs from the Excel spreadsheet.

Keep in mind, though, that this solution requires your clients to determine the appropriate income tax rates for each employee. Further, this approach doesn’t allow for unemployment, workers’ compensation, or other similar calculations.

In any case, clients can either look to you for tax rate guidance, or the truly self-sufficient can look to IRS Publication 15, commonly referred to as Circular E, for guidance on federal taxes. State income taxes must be researched individually, of course. In any case, it’s simple to get started with manual payroll in Office Accounting:

1. Set up employees
2. Enter wages and tax percentages into the manual payroll spreadsheet
3. Optional: Enter employee time in Office Accounting
4. Process payroll

I’ll discuss each of these steps in turn.

Set up Employees

As shown in Figure 1, Office Accounting enables manual payroll users to store select information about each employee within the software:

• Employee name
• Job title
• Telephone numbers
• Addresses (home, work, other)
• Status (active or inactive)
• Demographic data (gender and date of birth)
• Key dates (hire date, last review, release date)

Figure 1: No tax or wage information is stored in Office Accounting for manual payroll processing.

Notice that you cannot store financial data, such as pay rates or tax withholding percentages, within Office Accounting. However, you can enter and save this data within the manual payroll spreadsheet template.

Enter Wages and Taxes Into the Manual Payroll Spreadsheet

Carry out these steps to access the manual payroll spreadsheet:

1. In Office Accounting choose Employees, Manual Payroll, and then Enter Manual Payroll.
2. When prompted, enter the start and end dates for the current pay period.
3. After a few moments, the spreadsheet shown in Figure 2 will appear.

Figure 2: Manual payroll in Office Accounting is primarily handled via an Excel spreadsheet.

4. If the date prompt shown in Figure 3 appears, you can skip this step, otherwise you’ll need to enable macros:

• Excel 2007: If the Options button appears in the status bar, click Options, choose Enable this Content, and then click OK. If neither the Date prompt nor the Options button appear, then you’ll need to lower your macro security protection level:

a.       Click the Office button, and then click Excel Options.

b.      Click the Trust Center button in the left-hand column.

c.       Click the Trust Center Settings button on the right-hand side of the Excel Options window.

d.      Click the Macro Settings button in the left-hand column.

e.       Choose Disable All Macros With Notification, and then click OK twice.

f.       Close Excel, and then begin again with Step 1 above. This time the Options button will appear.

Excel 2003 and earlier: If prompted, choose Enable Macros. If this prompt does not appear, or you receive a prompt that macros are disabled, you must lower your macro security protection level:

a.       Choose Tools, Macro, and then Security.

b.      Choose Medium, and then click OK.

c.       Close Excel, and then begin again with Step 1 above. This time the Enable Macros prompt will appear.

Figure 3: This date prompt will not appear if macros are disabled in Excel.

5. Enter the dates for your pay period, and then click OK. Excel will retrieve data from Office Accounting, and then present you with the spreadsheet shown in Figure 4.
6. Click on the Step 1 – Set Up Taxes worksheet tab, and then enter the employee pay rates and tax percentages. Once you’ve done so, click the Save Set Up button shown in Figure 4. The employee inputs will be stored for future use, and retrieved automatically during the next manual payroll run.

Figure 4: Wages and tax rates are maintained within the accompanying Excel spreadsheet.

7. Click on the Step 2 – Set Up GL worksheet tab, and then assign general ledger accounts to each pay type. Once you’ve done so, click the Save Set Up button, as shown in Figure 5. Your GL account assignments will be stored for future use, and retrieved automatically during the next manual payroll run.

Figure 5: Manual payroll involves a one-time mapping to the corresponding general ledger accounts.

At this point you’re ready to start processing manual payroll with Office Accounting.

Enter Employee Time in Office Accounting

There are three ways to record employee time for manual payroll:

1. In Office Accounting, choose Employees, and then New Time Entry. You can edit or delete existing time entries by choosing Employees, Employee Lists, and then Time Entries (or press Ctrl-Shift-T).
2. In Office Accounting, choose Employees, and then New Timesheet.

Employees Home: You can also access the above options via the Employees Home page, which is available by choosing Employees, and then Employees Home (or press Ctrl-4).

3. Enter time manually into the Excel spreadsheet as part of the manual payroll process.

Any time that is entered through Office Accounting is automatically logged in the Excel spreadsheet during the manual payroll process, so your clients may find it helpful to have their employees maintain their time records in Office Accounting. Doing so is particularly helpful for any of your clients that bill employee time to clients, as entering time in Office Accounting can simplify the invoice process.

Process Payroll

Once you’ve completed the initial payroll steps, you’ll find that processing manual payroll is a straightforward process:

1. In Office Accounting, choose Employees, Manual Payroll, and then Enter Manual Payroll.
2. When the Excel spreadsheet appears on screen, enable macros if necessary.
3. Enter the date range for your payroll, and then click OK.
4. Click on the Run Payroll worksheet tab, and then complete the employee hours grid, including any post-tax deductions.
5. Review the Payroll Calculation grid on the right-hand side of the worksheet.
6. Once you’re satisfied with the payroll figures, click the Create Checks in SBA button in the Payroll Calculation spreadsheet, as shown in Figure 6. Save the workbook when prompted, and when wait for the confirmation prompt shown in Figure 6 to appear — this may take a minute or so. Be patient, because you likely won’t see any visual activity on your screen before the prompt appears. Further, the prompt may display behind another program window, so watch for the task bar button identified in Figure 6.

Figure 6: The Create Checks in SBA button posts the payroll transactions to Office Accounting — a confirmation prompt appears when the process is complete.

Clarification: Microsoft Office Accounting was formerly named Microsoft Office Small Business Accounting, so the initials SBA on the Create Checks button are carried forward from an earlier version of the software.

7. Optional: Choose Employees, Lists, and then Employee Payments to view or edit the paychecks before printing.
8. Click on the Pay Stubs worksheet tab. As shown in Figure 8, the spreadsheet generates a printable pay stub for each employee. Page breaks are automatically positioned, so you can simply print this worksheet.

Figure 7: The Excel spreadsheet generates printable pay stubs for each employee.

Beware: Be sure to manually adjust an employee’s pay stub if any manual adjustments are made to the paycheck before printing from Office Accounting.

9. In Office Accounting, choose Employees, Manual Payroll, and then Print Payroll Checks. Choose the payroll checks to print, and then click Print.

Manual Payroll Alternative

The manual payroll process that I described above works best when your clients have hourly employees to pay. However, there’s an easier alternative to consider if all employees are salaried:

1. In Office Accounting, choose Employees, Manual Payroll, and then Manual Payroll Check.
2. Complete the form shown in Figure 8. Note that each line of earnings and deductions must be entered manually as static amounts — this form does not allow calculations of any kind. However, it’s ideal for salaried employees whose earnings and deductions only change perhaps once or twice a year.

Figure 8: Recurring transactions for salaried employees can be set up on a recurring basis.

3. Once the paycheck is complete, click the Recurring button. As shown in Figure 9, assign a name to the transaction, such as Joe’s Paycheck, and then set the reminder parameters. Going forward, the transaction will appear in the Documents to Process list, and a notification will appear in the Reminders section of the company home page when the payroll transaction is due.

Documents to Process: This new feature in Office Accounting 2008 enables users to process recurring documents when due. Access this list from the Company Home Page; choose Company, Company Lists, and then Documents to Process; or press Ctrl-Shift-K.

Figure 9: Office Accounting can remind users when payroll transactions are due.

 

The views and opinions expressed in this column are those of the author and do not necessarily reflect the opinions of Microsoft.