Configuring Permanent Deductions with Fixed Percentage

Permanent deductions with fixed percentages can be configured, streamlining the payroll process for employees. This article outlines the steps to set up such deductions, ensuring that a predefined percentage is automatically applied to employees when processing payroll. It's important to note that this method is effective for deductions that remain constant for all employees.

 

Key Takeaways:

  • Transaction Type Configuration: Permanent deductions with fixed percentages can be established by creating and configuring a Transaction Type to define the fixed percentage or amount to be deducted from employee paychecks.

  • Formula Setup: Utilize the Admin Tool to set up a formula within the Transaction Type. This formula specifies the percentage to be calculated on the employee's earnings.

  • Deduction Application: The configured deduction is applied when processing payroll for employees. The system automatically calculates the deduction based on the predefined percentage.

Steps to Configure a Permanent Deduction with a Fixed Percentage:

Example: Deduction at a set Percentage [for this example: 1.25%]

 

Step 1: Create the Transaction Type

  • Navigate to the Admin Tool.
  • Select Transaction Type and go to Detail > Detail.

Result: The Transaction Type is created.

Screenshot 2023-10-17 at 3.17.03 PM.png

 

Step 2: Configure the Formula on the Transaction Type

In the Admin Tool, access Transaction Type > Detail > Formula.

  • Select the element on which the percentage will be calculated.

Result: The Transaction Type formula setup begins.

Screenshot 2023-10-17 at 3.16.43 PM.png

Step 3: Define the Formula

  • Add a new line in the formula.
  • Select the function "Multiply."
  • Define the percentage as a rate.

NOTE: If the rate is greater than 4 decimals, the system will round the value at 4 decimals for the calculation and display on the Formula screen.

Result: The formula for calculating the deduction is established.

Screenshot 2023-10-17 at 3.19.24 PM.png

Step 4: Define the Value to be Multiplied

  • Admin Tool > Transaction Type > Detail > Formula
  • Set the value that the rate will be multiplied within the formula.

Screenshot 2023-10-17 at 3.20.23 PM.png

Result: The Transaction Type formula is configured.

Screenshot 2023-10-17 at 3.21.24 PM.png

Step 5: Create the Deduction

  • Proceed to Employee > Payroll > Deduction > New Deduction.
  • Select "New Deduction."
  • Choose the configured deduction under the "deduction type."

Screenshot 2023-10-17 at 3.27.24 PM.png

Result: The Amount/Percentage field will be greyed out, indicating that the Transaction Type is formula-based.

  • Due to the potential complexity of a formula, the formula configuration it is not able to be displayed on this screen.

  • Save the deduction.

Screenshot 2023-10-17 at 3.26.08 PM.png

 

Step 6: Process Payroll

  • Go to Time Entry > Sheet View.
  • Pay the employee.
  • Close the Time Entry Batch.

Result: The employee's payroll information is updated.

Screenshot 2023-10-17 at 3.29.13 PM.png

 

Step 8: Process Payroll Batch

  • Go to Payroll > Home
  • Select Transaction
  • Process Payroll Batch

Screenshot 2023-10-17 at 3.52.13 PM.png

 

Step 9: View Paychecks

  • In Payroll > Checks, view the paychecks.
  • Select the transaction.

Result: The deduction will be automatically calculated based on the fixed percentage, e.g., [$360 x 1.25% = $4.50], and displayed on the paycheck.

Screenshot 2023-10-17 at 3.53.29 PM.png

 

NOTE: The fixed percentage deduction applies only when the Transaction Type is processed through Employee > Payroll > Deduction. If the Transaction Type is added during Time Entry, the rate will not be pulled in automatically.

 

By following these steps, permanent deductions with fixed percentages can be efficiently configured, ensuring accurate and hassle-free payroll processing for employees.

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