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Deduction items

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Deduction items are typically payroll taxes but there are also other deductions such as insurance, union fees or wage garnishment.

To add new deduction item which can be used on payslip:

1.Go to Settings tab.
2.Click Payslip Items.
3.Click New Deduction Item button.
4.Fill out information about the deduction item.
5.Click Create button to save the deduction item.

When you setup deduction item, you will need to select a liability account. This is because what you deduct from employee gross pay (e.g. payroll tax, union fees) is payable to someone else (e.g. tax authority, union).

You can lump up all deduction items into general Payroll liabilities account but it's a good idea to setup custom liability accounts under your Chart of Accounts for each deduction to give you more clarity on balance sheet.