Payroll is an independent function
Payroll is an independent function that is processed outside of the DBA system. Payroll has no connection with job costing or any other DBA functions. Because it is an independent function, there is no need to change payroll systems in order to use the DBA system.
If you are using outside financials:
If you are using the Financial Transfer option in conjunction with outside financials, you will continue using your outside system’s payroll module or payroll service as is.
If you are using DBA financials:
If you are using the DBA financial modules, most likely you are using a payroll service or a stand-alone payroll software package. The only change you will make is that concurrent with system startup day, you will change your payroll ledger accounts to be compatible with the payroll accounts in the DBA standard chart of accounts.
After each payroll run you will update the DBA general ledger through the Payroll Import screen or by means of a batch Journal Entry.
Payroll outsourcing is another option
If you prefer to outsource your payroll, you have the option of using a payroll service provider such as Paychex® or ADP®.
If you are using CheckMark Payroll
CheckMark Payroll® is a stand-alone software package used by some DBA customers. For setup guidance, see the CheckMark Payroll Setup white paper in the Documents – White Papers area of the online support center.
Is payroll required for job costing?
It is a common misconception that payroll is required for job costing. Payroll has no connection with job costing in DBA. In DBA, jobs are costed at your work center labor rate, which approximates your overall hourly cost for direct labor.
Must job hours agree with payroll hours?
Not at all. Job hours and payroll hours are not the same thing and have different purposes. Collecting job labor hours is optional, whereas the reporting of payroll hours is mandatory. Production workers are not always working on jobs and have downtime for meetings, training, and other purposes. You should collect payroll hours separately from job hours using a time and attendance system of your choice.
Payroll Setup
In order to import payroll into the DBA general ledger, you must restructure your payroll system’s departments and account assignments per the following guidelines:
Departments
Most payroll systems enable you to define departments. Within each department you can then establish your GL accounts for liabilities and expenses or cost of sales. You should set up the following departments to accommodate the six payroll cost categories in DBA.
Admin
Direct Labor
Indirect Labor
R & D
Sales
Service
Asset Account
If you are processing payroll with an in-house software package, you typically make payments out of a payroll bank account.
10200 Bank Account – Payroll
If you are using a payroll service, you do not make the actual payments out of your own bank account. Instead, these payments are made on your behalf by your payroll service provider. The accounting is done as follows:
Payroll Service Invoicing
When you outsource payroll, typically you receive an invoice prior to each payroll from your payroll service provider. Enter this invoice in the Supplier Invoices screen and distribute it to these two accounts:
22200 Wages Payable
61410 Payroll Service Fees
The actual payroll cost gets distributed to the Wages Payable account, which is a temporary clearing account that gets washed out when payroll is actually processed a few days later. If a service fee is charged for payroll processing, it gets distributed to the Payroll Service Fess expense account.
Liability Accounts
All departments can share these liability accounts:
22000 Deductions Payable
22100 Taxes Payable
22200 Wages Payable
Expense & Cost of Sales Accounts
Below are listed the expense and cost of sales accounts associated with each department:
Admin
62100 Admin Payroll – Benefits
62200 Admin Payroll – Taxes
62300 Admin Payroll – Wages
Direct Labor
54100 Labor Payroll – Benefits
54200 Labor Payroll – Taxes
54300 Labor Payroll – Wages
Indirect Labor
59000 Indirect Payroll – Benefits
59100 Indirect Payroll – Taxes
59200 Indirect Payroll – Wages
R & D
61800 R & D Payroll – Benefits
61820 R & D Payroll – Taxes
61840 R & D Payroll – Wages
Sales
60200 Sales Payroll – Benefits
60220 Sales Payroll – Commissions
60240 Sales Payroll – Wages
60260 Sales Payroll – Taxes
Service
51200 Service Payroll – Benefits
51300 Service Payroll – Taxes
51400 Service Payroll – Wages
Employee Department Assignments
Each employee is assigned to a department. In some cases an employee may be assigned to two or more departments with a percentage allocation to each. The following are definitions of each department that will help you make your employee assignments.
Admin
General administrative managers, supervisors, and clerical workers are assigned to this department.
Direct Labor
Production and setup workers are assigned to this department.
Indirect Labor
Factory managers, supervisors, as well as maintenance, warehouse, inspection, planning, purchasing, and shipping personnel are assigned to this department.
R & D
Employees associated with product research and development are assigned to this department.
Sales
Sales and marketing employees are assigned to this department.
Service
Billable service workers and their supervisors are assigned to this department. “Billable service” refers to repair services performed on behalf of customers and is not to be confused with factory maintenance.
Payroll Transfer to DBA
You have three options when it comes to transferring payroll information to DBA:
Account Summary Import
After each set of employee or payroll vendor payments are processed, a single debit or credit amount for each account is transferred into the general ledger using the Payroll Import screen. If you outsource payroll to a payroll service provider, we recommend that you import account summaries rather than transaction detail. Ample transaction detail reporting is available within the payroll system itself.
Account Summary Journal Entry
This option must be used when you are unable to export information from your payroll system. After each set of employee or payroll vendor payments are processed, you must create a batch Journal Entry where you enter a single debit or credit amount for each account. This information can be found on your payroll summary register.
Transaction Detail Import
After each set of employee or payroll vendor payments are processed, all account transactions associated with each payment are transferred into the general ledger using the Payroll Import screen.
NOTE: This method creates a great many ledger transactions that offer no reporting benefits beyond what is already available from reports within your payroll system. Unless you have a reason for all this transaction detail, we recommend that you import or enter account summary totals instead.
Payroll Import
(GL – Payroll Import)
Refer to the following link for detailed instructions on using the Payroll Import screen.
