By utilizing OnPay's selection of pay items, paying employees is completely customizable to fit your business needs. You have the option to customize the name and disbursement type of many pay items in the Company Menu. We have built these pay types into 4 categories with pre-defined characteristics. By marking the "Non-Hourly" option on any of your pay items you are telling the system that you will want to simply enter flat amounts for that pay type. It will not be based on a number of hours but is simply if you want to pay a certain amount (i.e. commissions, bonuses, or reimbursements).
W-2 Wage pay types allow you to pay someone a regular W-2 wage that you customize. For example, if you want to have a distinct difference in the amount you pay per hour for 2 different jobs that one employee may perform, you can name them differently, and once added to the employee, set up a different rate of pay for each. All the while knowing that each W-2 pay type you pay an employee will flow directly through to their W-2 at the end of the year.
OnPay also offers many customizable 1099 pay types. Many contractors are paid flat amounts for completing an agreed-upon job, so these are treated as non-hourly by default. If you have contractors that perform different job types then customizing those pay types can help you easily identify the job someone is being paid for, at the agreed upon rate for that contractor. Just like the W-2 pay types flow through to the employees W-2, all the different 1099 pay types a contractor received throughout the year get added together and will flow into one 1099 at the end of the year.
Non-reported pay types are also available within OnPay and can be customized as well. They allow an employer to give an employee funds without it being recorded for any tax or year-end reporting purposes. The most common use of these pay types is for reimbursements of items such as mileage or cell phone usage. When you use a non-reported pay item it will not flow through to any forms provided to employees. For your accounting records, these items are treated as an operating expense, not a payroll expense.
The Imputed/Other pay types section houses highly customized payroll items that we have built for your use as needed.
- Insurance Benefit Taxable (Ins Benefit Taxable) is a pay type designed for use by more than 2% shareholders in an organization that have their insurance benefits paid for by the company. This pay item is labeled insurance because that is its most common use, but it can really be used for any taxable fringe benefit a more than 2% shareholder receives. By using this pay type, the employees are paid an amount that is taxable only for purposes of Federal and State Income Tax. For example, John is a more than 2% shareholder. His company pays his health insurance of $12,000 each year. At the end of the year, the amount paid for John's health insurance can be run through payroll using this pay type. In this example, the Gross Pay would be $12,000, the Taxable Wages for both Federal and State Income Tax would be $12,000, and the deduction would be $12,000. Processing this item without any other pay item would result in a zero net check which would simply increase box 1 and box 16 on the employees W-2.