Overview: The application allows you to customize the way you pay employee by the use of pay types. You have the option to customize the name and disbursement type of many pay items. We have built these pay types into 4 categories with pre-defined characteristics. By marking the "Treat As Cash" option on any of your pay items you are telling the system that you will want to simply enter flat amounts for that pay type. It will not be based on a number of hours, but is simply if you want to pay a certain amount (i.e. commissions, bonuses, or reimbursements).
W-2 Wage pay types allow you to pay someone a regular W-2 wage that you customize. For example, if you want to have a distinct difference in the amount you pay per hour for 2 different jobs that one employee may perform, you can name them differently, and once added to the employee, set up a different rate of pay for each. All the while know that each W-2 pay type you pay an employee will flow directly through to their W-2 at the end of the year.
OnPay also offers many customizable 1099 pay types. Many contractors are paid flat amounts for completing an agreed upon job, so these are treated as cash by default. If you have contractors that perform different job types then customizing those pay types can help you easily identify the job someone is being paid for, and the agreed upon rate for that contractor. Just like W-2s pay types flow through to the employees W-2, all the different 1099 pay types a contractor received throughout the year get added together and flow into one 1099 at the end of the year.
Non-reported pay types are pretty self explanatory. They allow an employer to give an employee funds without it being tracked for any tax or year end reporting purposes. The most common use of these pay types is for reimbursements of items such as mileage, or cell phone usage. When you use a non-reported pay item it will not flow through to any forms provided to employees. For your accounting records, these items are treated as an operating expense, not a payroll expense.
The Imputed/Other pay types section houses highly customized payroll items that we have built for your use.
- Insurance Benefit Taxable (Ins Benefit Taxable) is a pay type designed for use by more than 2% shareholders in an organization that have their insurance benefits paid for by the company. This pay item is labeled insurance because that is it's most common use, but it can really be use for any taxable fringe benefit a more than 2% shareholder receives. By using this pay type, the employees is paid an amount that is taxable only for purposes of Federal and State Income Tax. For example, John is a more than 2% shareholder. His company pays his health insurance of $12,000 each year. At the end of the year, the amount paid for John's health insurance can be ran through payroll using this pay type. In this example, the Gross Pay would be $12,000, the Taxable Wages for both Federal and State Income Tax would be $12,000, and the deduction would be $12,000. It would result in a zero net check, assuming it is not ran aside another pay item, and would simply increase box 1 and box 16 on the employees W-2.