Use this screen to verify that the last pay period for the current payroll year is open, close it, and then open the first period in the next payroll year. You can also update the employee deduction limits for deductions with an ongoing/cumulative limit by reducing the limit by the amount deducted for the calendar year. Updating the deduction limits is the main reason for running this application. Additionally, this process will insert the YTD Unspent column amount into the Prior Yr. Unspent column in the Maintain Employee Bond Table. It will also change the YTD Unspent, Spent amount, and No. Bought to zero.
You will close the payroll year once each calendar year at the end of the calendar year. The payroll year close is based on the calendar year rather than the fiscal year because of IRS and state tax filing requirements. Closing the payroll is more than just running a particular program at the right time. It is important that the close be performed at the proper time between pay periods. See the Hints at the end of this section for more detailed instructions.
Execute this process AFTER posting all payroll checks dated in the current calendar year through the Payroll Journal. This ensures that all current year wages and deductions will appear properly on the W-2s, quarterly payroll reports, and the year-to-date Earnings Report. You can add additional compensation and taxable fringe benefits in the Maintain Employee Earnings screen after the calendar year is closed, and before quarterly reports and W-2s are printed.
Execute this process BEFORE computing payroll that will be paid in the future year. You can enter the timesheets before closing the payroll year, but you should not create payroll that will be paid in the future year until the payroll year has been closed. Improper deduction amounts may result.
Enter the four-character pay cycle code or use Lookup to select the code for which you want to close the payroll year. This is a required field. When you enter this code, the description for the pay cycle will display to the right.
Use the options in this group box to control the sort of the report.
Select this radio button to sort the report by employee ID.
Select this radio button to sort the report by employee name.
This group box becomes available after you enter the Pay Cycle. This non-editable table displays the dates for the Pay Cycle that will be closed by this process.
This non-editable field displays the current start date of the pay cycle that is open.
This non-editable field displays the current end date of the pay cycle that is open.
This non-editable field displays the current payroll year for the pay cycle that is open.
This non-editable field displays the next start date of the pay cycle that will be opened by this process.
This non-editable field displays the next end date of the pay cycle that will be opened by this process.
This non-editable field displays the next payroll year for the pay cycle that will be opened by this process.
When you first enter this screen, this button on the toolbar is grayed out. If you select this button after printing the journal report as part of this session (the button becomes available after printing), you will receive a message asking if you really intend to close. If you answer OK, the closing process will proceed. Selecting this button will close the last pay period of the current payroll year. The Pay Cycle Schedule in the Pay Periods screen will reflect the closing by changing the "Y" in the Open Flag column to an "N." It will also update the employee deduction limits for deductions with an ongoing/cumulative limit, by reducing each limit by the amount deducted for the calendar year. If the ongoing deduction limit is "$0.00," the Method will be updated to "NO DED" in the Employee Deductions screen in Costpoint Employee.
There are three edits in the closing process. There are two hard edits that prevent the pay cycle year from being closed. The first occurs if there are current Pay Cycle Period transactions in the Employee Payroll table (Payroll Edit table) that have not been posted to the General Ledger. The second occurs if the open pay cycle period is not the last pay period of the current payroll year. There is also a soft edit that occurs if there are no records in the Employee Earnings table for the current period.
You can select this button on the toolbar when you first enter this screen. If you do, you will receive a message asking if you really intend to close. If you answer OK, the journal report prints with the closing process following immediately. Selecting this option will close the last pay cycle of the current payroll year. The Pay Cycle Schedule in the Pay Periods screen will reflect the closing by changing the "Y" in the Open Flag column to an "N." It will also update the employee deduction limits for deductions with an ongoing/cumulative limit, by reducing each limit by the amount deducted for the calendar year. If the ongoing deduction limit is "$0.00," the Method will be updated to "NO DED" in the Employee Deductions screen.
There are three edits in the closing process. There are two hard edits that prevent the pay cycle year from being closed. The first occurs if there are current Pay Cycle Period transactions in the Employee Payroll table (Payroll Edit table) that have not been posted to the General Ledger. The second occurs if the open pay cycle period is not the last pay period of the current payroll year. There is also a soft edit that occurs if there are no records in the Employee Earnings table for the current period.
Deductions - DED_CD
Basic Employee Info - EMPL
Employee Deductions - EMPL_DED
Maintain Employee Earnings/Deductions - EMPL_EARN_DED
Employee Taxes - EMPL_TAX
Pay Periods - PAY_PD
Pay Period Schedule - PAY_PD_SCH
Deduct Excess Life Insurance - Be sure that you have deducted social security and Medicare on excess life insurance premiums over $50,000.00.
Enter all Paychecks Dated Before December 31 - All paychecks (regular and bonus) that are dated in the calendar year being closed must be entered into the system and properly posted to the General Ledger through the Payroll Journal. Paychecks that are not posted before the calendar year is closed will not be included on W-2s unless they are manually entered into the Maintain Employee Earnings screen.
Print the Earnings Report and Review - Review the Earnings Report to ensure that the earnings are reasonable.
Make a Backup - Make a data backup of the EMPL_DEDUCT table so that you can restore the pre-close data if necessary. If you will be upgrading to a higher version of Costpoint in the near future, back up the executables as well, before upgrading.
Update Tax Tables - Update the Federal Taxes screen in the Payroll Tax Controls menu for the new year's tax information so that taxes for the new year will be properly calculated. The federal and state tax tables can be copied in from the CD-ROM or can be manually entered into the appropriate screens after you close the payroll year. Complete updated printed federal and state information and a Tax Update diskette are usually mailed in late January/early February. Note that if you have not yet received the updated section before your first or second payroll, you do not need to change your state withholding tables if your states did not change. If they did change, review the nature of the changes in your updated withholding booklet from the state(s). You can enter the changes into the appropriate tax tables. Another option is to withhold at last year's rate for one or two payrolls, which is normally not a material difference. We cannot mail the updated tax tables until the end of January because there are many state changes that take place in late December and early January.
Add Additional Compensation Items - Enter W-2 adjustments directly into the Maintain Employee Earnings screen. Note: Additional compensation items that are social security and Medicare taxable should be added to gross pay before the year is closed and social security and Medicare withheld from employees. See Payroll Special Topic PR-4, "W-2 Processing," for more extensive information.
Print Quarterly Payroll Taxes Reports - The Quarterly Payroll Taxes Reports will include any additional compensation items you added which you will need to prepare your 941 and state unemployment filings.
Reprint the Employees' Earnings Report - You will want to reprint this report if you have added additional compensation items in the Maintain Employee Earnings screen, because the additional compensation items are included.
Print the State and Local Withholding Tax Reports - Print these reports (Tax Reporting) for the period beginning 01/01 and ending 12/31. These reports will support the year-to-date wages and withholdings for each state and locality.
Print W-2s - You are now ready to print W-2s. Please refer to the documentation for the individual menu selections and to Payroll Special Topic PR-4, "W-2 Processing."