Pages

2014/02/25

Pay Employee Expenses on Payroll via Direct Deposit

It’s more convenient for everyone involved to reimburse employees via direct deposit for expenses on their payroll check - two payments accomplished in one transaction. If your employees submit Expense Reports, those approved reports can be included automatically in your payroll process.

Limitations


There are a couple of limitations to be aware of before implementing this feature in your company’s workflow. Payments for expenses to employees can only be made on payroll day. (If you need to make one on a non-payroll day, you’ll have to use a “Pay Bill” transaction.) If you are reimbursing employees for an amount on an Expense Report, you will have to reimburse for the whole amount. This method does not allow for partial reimbursement.

Configure Direct Deposit


If you want pay Employees via Direct Deposit, you will first need to configure an account for these payments. NetSuite uses Ceridian for processing Direct Deposit, so you will need an account with Ceridian to be able to use Direct Deposit Payroll (If you are using the legacy Basic Payroll module, you will need an account with Coastal for processing).

To discover whether or not you are set up with Ceridian, go to Setup> Payroll> Setup Payroll. If there is a Service Start Date then you are using the Premier Payroll (Direct Deposit ready via Ceridian).

If there's none, then you’re just using basic payroll. Basic payroll users can also do Direct Deposit through Coastal, but NetSuite no longer sells Basic Payroll module. If you are using Basic Payroll, you will need to setup the Direct Deposit directly with Coastal.

After configuring NetSuite to work with Direct Deposit, you will also need to configure the payment for each employee. This involves entering their bank account and routing number as well as sending a prenote to the employee’s bank account to verify that the transmission is working properly.

Configure the System to Pay Expenses on Payroll


So let’s assume your Direct Deposit has been configured and your employee bank accounts entered. Now it’s time to set up your payroll for reimbursing expenses.

First, you will need to enable the Pay Expenses on Paycheck preference within NetSuite. This preference simply turns on the feature for use in your system.
  1. Go to Setup > Payroll > Set Up Payroll;
  2. Check the Pay Expenses on Paychecks box;
  3. Click Save.

After enabling the feature, you will need a payroll item you can use for reimbursing employees. So the next step is to create a payroll item.

Because we do not want this reimbursement item to affect tax withholdings or the employee’s gross pay, we will use Earning:Expense as the item type. This means that the dollar amount posted will be added to the employees net pay. Also, the amount will not be included on the employee’s W2 form.

Create a Payroll Item


  1. Go to Lists > Employees > Payroll Items > New (Administrator)
  2. Click on the Earning:Expense link
  3. On the Payroll Expense Item page, if you have a NetSuite OneWorld account, select a subsidiary from the drop-down list in the Subsidiary field
  4. Enter a name for the earning item
  5. The Type field displays payroll item type - this type determines how this new earning will be taxed and reported.
  6. Select a Report Section from the drop-down list to specify which section of payroll reports should display this amount.
  7. Check the Inactive check box to prevent the use of this Earning Item - clear the check box to make it available.
  8. Click Save.

If you would like to pay approved Expense Reports on an employee’s paycheck, you will need to add this new Payroll Item to the Employee’s Payroll record.

Add an expense payroll item to an employee record


  1. Go to Lists > Employees > Employees
  2. Click Edit next to the employee name
  3. On the employee record click the Payroll subtab
  4. Click the Earnings subtab
  5. In the Earnings field, select the expense payroll item
  6. Click Add
  7. Click Save.


Reimbursing Expenses On Payroll Day


  1. Go to Transactions > Employees > Create Payroll
  2. On the Payroll Run page, verify that the Pay Expenses box is checked
  3. Check the box in the Pay column next to each employee you want to pay
  4. Click Calculate
  5. On the Payroll batch page, click View next to a paycheck
  6. Click the Expenses subtab
  7. Verify that the expense amounts are correct and that the box is checked in the Pay column next to all expenses you are paying
  8. Click Accept.

No comments:

Post a Comment