Labor Accrual

Labor can be accrued based on Timekeeping, Budgets, posted Payroll Batches, and Personnel Scheduling or a combination of two different accrual types. This topic will help you ensure the setup is complete, and help you decide which accrual type to use to best meet your business needs.

To set up Labor Accruals

Accrued wage and tax accounts are designated within Company Defaults and are used when posting an accrual.

To create these accounts in Chart of Accounts, see Setting Up the Chart of Accounts.

  1. From the System Menu, click Setup, and then click Company Setup.
  2. Enter the GL Number to use for labor accrual wages in the Accrued Wages GL Number field, in the Payroll section. This is normally a Liability account.
  3. Enter the GL Number to use for labor accrual taxes in the Accrued Taxes GL Number field, in the Payroll section. This is normally a Liability account.
  1. Go through every Other Compensation to verify whether it should have the Include in Accruals check box selected. This check box should be selected if this Other Compensation effects your wage.
    2. Example:  If the compensation is for a bonus or payroll correction you will select the Include in Accruals check box. If the compensation is for a refund or mileage you will not select the Include in Accruals check box.
  2. Go through every Other Deduction to verify whether it should have Include in Accruals check box selected.

    3. Example:  If the deduction is for a payroll correction you will select the Include in Accruals check box. If the deduction is for a loan repayment or fundraiser deduction you will not select the Include in Accruals check box.

    You should consult a professional tax advisor for guidance and specific questions.

Understanding Accrual Types

In order to use this accrual type effectively, you need to ensure that daily hours are entered. Meaning, all timekeeping hours for a week are not entered as a lump sum under one day, but the hours are separated by the day the hours were worked.

Note:  All types of salaried hours are not included in this type of accrual even if you select the Include Salaried Hours check box on the Labor Accrual step of the wizard. The salaried dollars are included in the Labor Distribution Journal based on the Percentage of Salary to Accrue value. All Other Compensations/Deductions, employee/employer taxes are not included in this type of accrual.

For detailed steps on this type see Accruing Labor based on Timekeeping.

This accrual type allows you to base the labor accrual on the budgeted hours. WinTeam uses the Daily Budgets information to determine the labor to accrue. This type is beneficial if you outsource payroll and import an adjusting journal entry to log the transactions in WinTeam. If you include overtime hours and dollars in your budget it is then included in this accrual type. Another benefit of using this type of accrual is that you can process this accrual before hours are in Timekeeping and before you process your Check Processing Wizard.

Note:  If you enter a salary employees' hours in your budgets, those hours are displayed on reports, but the salaried dollars are not reflected. Also, the Total labor dollars are not changed, and the average rate decreases, since there are additional hours, and no additional dollars. All Other Compensations/Deductions, employee/employer taxes are not included in this type of accrual.

For detailed steps on this type see Accruing Labor based on Budgets.

This accrual type allows you to base the labor accrual on selected payroll batches. WinTeam uses all hourly and salary employee wages within the payroll batches selected. Unlike the other types, this type allows you to accrue taxes and Other Compensations/Deductions. Also in this type of accrual you are able to accrue a percentage of all, or a portion of the following items:

Hourly Wages

Hourly Holiday Wages

Salary Wages

Taxes

*Hourly Compensations

*Other Compensations

*Hourly Deductions

*Other Deductions

*Only those compensations and deductions set up to “Include in Accruals” are included when determining the amounts of compensations and deductions to accrue.

For detailed steps on this type see Accruing Labor based on Payroll Batches.

This option allows you to base the labor accrual on Personnel Scheduling. WinTeam uses the hours in the Schedule to calculate. This type is beneficial when you want to complete your labor accrual prior to running the Personnel Scheduling Wizard. When using this method, the overtime is calculated using the entire pay week and then accrual is only for the date range entered.

Also, this type is beneficial if you outsource payroll and import an adjusting journal entry to log the transactions in WinTeam.

Note:  

For the Personnel Scheduling accrual type:

Employee vacation, holiday, sick and overtime hours are only included if they are recorded in the schedule.

Overtime is calculated using the entire pay week and the accrual is only for the date range entered.

Salary employees' hours display on the Labor Distribution Journal but not the dollars.

All Other Compensations/Deductions, and taxes are not included.

Tip:  

Run a timekeeping labor accrual for everything that already exists in Timekeeping, but has not been updated from Personnel Scheduling. You also want to catch adjustment records, PTO, or any other type of timekeeping records that have not been updated. Also, you can process labor accruals for salaried employees.

Next, run a separate accrual using the method of Personnel Scheduling. This is run this through the same PS Wizard (Compute Schedules) logic to split shifts and get pay rates.

Next, WinTeam processes overtime through the Overtime Engine.

From this point forward, the logic inside the labor accrual is the same as if it came from timekeeping, except that we only include the records that came from Personnel Schedules. This creates a Payroll batch with all of the summarized data needed to create and post the accrual.

For detailed steps on this type see Accruing Labor based on Personnel Scheduling.

Based on your situation, there may be instances where you would want to do a combination of two type of labor accruals each month.

Example:  Running a Timekeeping accrual to pick up the hourly employee records, (this is usually the most accurate type since it looks at the specific days of the week and reverses out those labor entries). Then you would also create an accrual using the Payroll Batches type to include holiday, salary employees, taxes and other compensation/deduction amounts.

For Labor Accrual based on Timekeeping and Personnel Scheduling, we are using the Basic Read Security level to find the employees timekeeping records and employee’s salaries to include in the Timekeeping Accrual.

For Labor Accrual based on Budgets, we are not using security since there are no employees to look at when doing accruals based on Budgets.

For Labor Accrual based on Payroll Batches, we bypass all Security Level checking and always include all records in the batches being selected.

We do 1 and 3 above so that we do not exclude an employee from the accrual, since the User does not know that they are not accruing for everyone.

The Creator Security level, written into the Batches table (check processing wizard batch screen), writes in the Pay Check Write security level like all other batch types. That way, the Creator is able to see the batches they created.