Any leading accounting system such as the GMS Accounting and Financial Management System has the ability to be extremely flexible when it comes to payroll deductions. We’re talking now about items other than payroll taxes that are required to meet tax obligations for various government levels. These “other deductions” can include things such as employee retirement contributions, personal contributions to organizations such as United way or money to go to an employee’s savings account.
However, should you decide to open up this capability to accommodate a variety of deductions you should implement a policy as to how many times a year staff can change, add, or remove a deduction. You don’t want to create a situation where staff are coming to you on a regular basis asking you to tweak the amount of their savings deduction or not withhold a particular deduction “just for this pay” because they want the extra cash on their check. Don’t misunderstand us here because your accounting software does need to have the capability to handle these special situations. Something may happen that will require you to react immediately as far as payroll deductions are concerned.
What we are suggesting is that you set up a schedule or specific date(s) as to when you will accept and change optional payroll deductions. The larger the staff you have, the more important of an issue this is.
The first two paragraphs of this blog give you reasons why it can be a very beneficial option to offer your staff. However, if you don’t have a procedure in place as to when deductions can be added or changed, you may be spending more time on a regular basis making deduction changes than you will be actually processing the payroll.