A payroll deduction is an amount of money that is withheld from an employee’s paycheck in order to make a payment to a third party. Examples could be pre-tax deductions, such as insurance premiums and 401k savings, or after-tax deductions such as loan repayments, wage garnishments, and employee purchases. For a full definition, see Deductions in our Payroll Glossary. For further reading about using payroll deductions, see our blog article An Overview of Payroll Deductions.
A deduction is different than a contribution. In Patriot Software, a contribution is a company-paid amount that appears for informational purposes only and does not affect the paycheck. See Company-Level Contributions in Patriot Software.
Note that Patriot Software does not send your collected deductions and contributions to a third party, such as your 401(k) provider or health insurance carrier. You are responsible for sending these funds directly.
To set up company-level deductions in the Payroll Software:
Before you can set up specific deductions for individual employees, you must first set up the deductions under the Company level.
Settings > Payroll Settings > Deductions & Contributions
To add a new deduction:
- Click the “Add New” link under the Deductions section.
- A set of blank fields will appear. For detailed field information, see Company-Level Deduction Set-up: Field-Level Help.
- Once you set up the deduction at the company level, you are now ready to assign it to your employees. See Employee-Level Deductions.
To edit a deduction:
- Click the “Edit” icon in the row. You can now make changes in the appropriate fields for that deduction. Note: if a deduction has been assigned to an employee and/or used in a payroll, the Deduction Type and Method cannot be changed. All other fields may still be edited. For details, see Why Can’t I Edit a Company-Level Deduction?
- Click Save. If the field you edited is a company default field used on an employee’s record, the employee’s deduction will be automatically updated.
To delete a new deduction:
- Click on the “Delete” icon in the row. You may only delete a deduction if it has not yet been used in a payroll. If the deduction has been used in a payroll, the delete icon will not be visible.
- Click either Yes or No.