Employees and Pay Runs

Payroll pays your W-2 employees: you enter their hours, Al-Mohaseb works out each paycheck from gross to net, and posting the pay run puts the wages, the employer's taxes and what you owe the tax agencies in your books. Contractors are vendors: pay them with bills, and they show on the 1099 totals.

Menu	Payroll > Pay runs, Payroll > Employees, Payroll > City income taxes, Payroll > Tax content, Settings > Payroll
Permission	View pay runs and pay stubs; Run and post payroll (to change them); Verify payroll tax content
Feature	Payroll

Can't find it?

What you see depends on your role. If the menu, a button or a setting on this page is missing, ask your administrator to give you the permission listed above or to turn on the feature. Only administrators can turn features on and change site settings.

Before you start

• Settings > Payroll: your federal deposit schedule (see Filings and tax payments), your state unemployment rate, as your state's unemployment agency assigned it, and its wage base (each employee's wages taxed in a year). Choose the liability the taxes are held in until you pay them; without one, they go to Payroll Liabilities.
• Payroll > City income taxes: the cities whose income tax you withhold, with their resident and nonresident rates and the yearly exemption. The setup adds Detroit; check the rates with each city every year.
• Payroll > Tax content: the federal and state tables and rates of each year (Michigan, Massachusetts and Virginia come with Al-Mohaseb). They come with Al-Mohaseb and must be verified before you rely on them; see Tax content.

Add an employee

1. Open Payroll > Employees and select Create Employee.
2. Enter the name, the Social Security number (it is kept protected; only its last four digits are shown afterwards) and the home address. The city of the address decides a resident city tax.
3. Under Pay: paid by the hour (the hourly rate) or a yearly salary, how often (Paid every), the overtime multiplier, the hire date, and where the employee works when it is not the business's city.
4. Copy the employee's Form W-4: the filing status (Step 1c), the Step 2 box, the dependents amount (Step 3), other income, deductions and extra withholding (Step 4), or exempt.
5. Under State withholding certificate, copy the form of the state the employee works in (Michigan MI-W4, Massachusetts M-4, Virginia VA-4): the exemptions (also used for the city tax), any age or blindness exemptions, head of household (Massachusetts), extra withholding, or exempt.
6. Select Publish.

Clear Paid in pay runs for someone who left; their pay history stays.

Run payroll

1. Open Payroll > Pay runs.
2. Under Start a pay run, enter the pay period and the pay date, and choose which employees: all, or those paid on one schedule. The pay date sets the tax year.
3. In the pay run, enter each hourly employee's hours, overtime and any bonus; salaried employees are already paid their share of the salary. Select Save and work out again.

Each paycheck shows its gross, the taxes withheld and the net pay; hover over Withheld to see each tax. The Taxes table sums what is withheld and what you pay as the employer:

Tax	Who pays	How
Federal income tax	Employee	IRS Pub 15-T percentage method from the W-4
Social Security	Both	6.2% each, up to the year's wage base
Medicare	Both	1.45% each; 0.9% more withheld above $200,000 in the year
FUTA	Employer	0.6% of the first $7,000 of each employee's wages
State income tax	Employee	By the state the employee works in: Michigan 4.25% of the wages less the exemptions; Massachusetts 5% (9% above the surtax threshold) less the exemptions and up to $2,000 a year of Social Security and Medicare, nothing under $8,000 a year; Virginia 2% to 5.75% less the standard deduction and exemptions
Paid family and medical leave (Massachusetts)	Both	0.46% withheld; the employer pays 0.42% from 25 employees
City income tax	Employee	The city's resident rate where the employee lives, or its nonresident rate where the employee works
State unemployment	Employer	Your rate on the wage base of Settings > Payroll

An employee who works in a state without tax content cannot be paid until that state's content is loaded: Al-Mohaseb does not guess. A state without income tax, such as Texas, is loaded as content with no brackets. State unemployment uses the single rate of Settings > Payroll.

Post and print

1. Choose the account the net pay comes from and select Post. The paychecks are worked out again first, so they count every pay run posted since.
2. Select Stub on a paycheck to print the employee's earnings statement with the year to date.

Posting puts the gross wages and the employer's taxes in your expenses, every tax withheld and owed in the payroll liability until you pay it, and the net pay out of the account. Unpost takes a pay run out of the books so you can correct it; Delete the draft removes one never posted.

When you pay the taxes, record the payments and get the figures of your returns as described in Payroll filings and tax payments.

Tax content

Withholding depends on tables and rates the IRS and the states publish each year. In Al-Mohaseb they are tax content: data loaded for each year, not part of the program, so a new year or a correction does not wait for an update. Payroll > Tax content lists each year's federal and state figures and whether they are verified; a pay run warns while its year is not.

Someone with the Verify payroll tax content permission, usually your accountant or provider, compares each year with IRS Publication 15-T, the Social Security wage base, and each state's withholding guide (Michigan Form 446, Massachusetts Circular M, Virginia's Employer Withholding Instructions), then selects Mark verified. A pay run whose year has no tax content cannot be worked out until it is loaded.

caution

Check a year's tax content before you pay employees with it. The content that comes with Al-Mohaseb is marked not verified on purpose.