OnPay comes with the common pay items most employers use, and you can even create custom pay items of your own. Pay items ensure your payroll is accurately taxed and itemized on employee pay stubs and year-end forms, and can be mapped to your accounting software.
Examples of pay items you may need to add
- Bonus
- Cash Tips
- Commission
- Piece Rate
- Owners' Draw
- Reimbursement
- Clergy Housing
- Shareholder insurance
Payroll pay items
Go to Payroll>Set up>Pay Items.
Pay items are listed in four categories. Each pay item can be hourly, or non-hourly.
Hourly versus non-hourly
Hourly pay items let you set a rate for an employee, to calculate wages based on hours worked. Non-Hourly pay items let you enter specific amounts for that pay type when processing payroll, and are useful for commissions, bonuses, or reimbursements.
Pay item categories
Pay items are grouped into four categories, based on how wages may be taxed and reported.
W-2 Wages
W-2 pay items consolidate and report itemized wages on employee W-2s and pay stubs. Examples include regular wages (hourly), and cash tips (non-hourly).
Do your employees work multiple roles?
If you pay employees differently based on the role performed throughout the day or week (like "bartender", "Server", "Host"), use custom pay items to keep things organized.
1099 Wages
1099 pay items consolidate and report itemized wages on Forms 1099-NEC, as well as on pay statements. Because contractors are generally paid flat amounts for agreed-upon tasks, these pay items are non-hourly by default.
Do your contractors perform multiple tasks at different rates?
Creating a custom pay item for each type of work your contractors perform at a specific rate (like role-based pay or piecework pay), helps you keep track of what work someone's being paid for, and at what rate.
Non-reported
Non-reported pay types let you pay an employee without it being included in tax calculations or year-end reporting. Typical examples include reimbursements for mileage or cell phone usage.
Note:
For accounting records, these items are treated as an operating expense, not a payroll expense.
Imputed/Other
Imputed pay is the cash value of any taxable, non-cash benefits employees receive. Imputed income holds monetary value, and counts toward an employee’s gross income when calculating taxes.
Some examples of imputed pay:
- Personal use of a company car
- Employee discounts
- Adding a domestic partner or non-dependent to your health insurance policy
- Adoption assistance in excess of the tax-free amount
- Care assistance for dependents exceeding the tax-free amount
- Group-term life insurance in excess of $50,000
- Educational assistance and tuition reduction
- Non-deductible moving expense reimbursements
- Gym memberships and fitness incentives
- 2% shareholder insurance
Shareholder insurance
Shareholder Insurance is a pay type designed for use by more-than-2% shareholders in an organization who have their insurance benefits paid for by the company. By using this pay type, the amount paid is taxable only for Federal and State Income Tax. While it's labelled "insurance", this pay item can also be used for any taxable fringe benefit a more-than-2% shareholder receives.
Learn more about adding 2% shareholder benefits to W-2s.