What we'll cover
- Viewing existing payroll deductions
- Creating new deductions
- Deduction types explained
- Adding deductions to employees
What are payroll deductions?
Payroll Deductions are anything that is taken from an employee's pay, whether it be pre or post-tax, other than payroll taxes themselves. OnPay offers pre-built, customizable deductions that you can add to your account. Depending on the type of deduction you choose to add, you will be given the ability to customize that deduction exactly how you need to.
Common deductions are:
- 401(k) contributions
- Medical insurance premiums
- IRA contributions
- Advances
- Uniform expenses
To learn more about payroll deductions including withholdings, mandatory deductions, and taxable wages, read Everything every small business owner should know about payroll deductions.
Viewing existing payroll deductions
Go to Company, then Worker Deductions.
Existing deductions are listed on the left, under "Payroll Deductions".
Creating new deductions
Create new deductions with custom names by clicking +Add. Once you create a new payroll deduction, you will need to assign it to each employee that will utilize that deduction. We'll cover this later.
Give this deduction a name that is simple and easy to understand. After you choose a deduction type from the list, you'll see any available options for the selected type.
Click Create when you're ready.
You should now see your new payroll deduction in the list on the left.
Deduction types explained
When adding a new payroll deduction, the options found under "Select Type" allow for you to associate your payroll deduction with a deduction recognized by your local and federal tax offices.
Common deduction types:
- Standard deduction - An after-tax deduction.
- 401k Retirement - Pre-taxed Retirement deduction, reduces federal and state taxable wages by the amount of contribution.
- 403B Retirement - Retirement account for certain employees of Public Schools & tax exempt organizations or not-for-profit organizations. This is a pre-taxed Retirement deduction reduces federal and state taxable wages by the amount of contribution.
- 457 Retirement - Pre-taxed Retirement deduction, reduces federal and state taxable wages by the amount of contribution. Offered by state & local government & some nonprofits.
- Roth 401k Retirement - Post-taxed Retirement deduction.
- Roth 403B Retirement - Post-taxed Retirement deduction.
- FSA - Pre-taxed Flexible Spending Account deduction, commonly used for medical expenses.
- HSA Health Savings - Pre-taxed deduction, funds roll over and accumulate year to year if not spent.
- Simple IRA Retirement - Taxed Retirement deduction, reduces federal and state taxable wages by the amount of contribution.
- Section 125 - Pre-taxed deduction that reduces taxable income.
- Section 132 -Pre-taxed deduction for transportation reimbursement costs.
Adding deductions to employees
All deductions are available for use for all employees once they are created. However, you have complete control over who has which deductions, as well as some employee-specific customizations that you may need to do.
Choose an employee from the "Employees" list.
Click Job, then Deductions.
Your new payroll deduction will be available when you press the blue (+) button.
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