This guide is intended to provide the Payroll Processor with instruction on using Canadian Payroll.
Please note that at the time of this writing, we do NOT support a worker working in multiple provinces in Canadian Payroll. If you have an employee in more than one province in a calendar year, a separate Canadian Payroll employee will need to be created for each province. YTD’s and max thresholds will need to be tracked manually.
Definition of terms:
- Payroll Worksheet: An Excel-based document that indicates the Pay Frequency, Pay Date, Pay Period, Starting and End Date of the pay period. If the pay period is open or closed, you use this to calculate the gross pay and taxes.
- Employee Card: Shows the employee set up, with sections for General, Address & Contact, Administration, Personal and Payroll information.
Step 1: Using the Payroll Worksheet
Payroll processing is performed with the Payroll Worksheet.
Before the Payroll Worksheet can be used:
- The Payroll Setup Wizard must be run.
- Each Employee must have their payroll-specific information defined.
Refer to the Canadian Payroll Setup and Configuration Guide for details.
To find the Payroll Worksheet, enter “Payroll Worksheet” in the Search Bar.
Your User record must have the “PAYROLLPRO” permission set to access and use the Payroll Worksheet (or equivalent, if the permission set has been customized).
Step 2: Preparing the Payroll Run
When the Payroll Worksheet starts, it will show you the current open Payroll Run. If there is no open Payroll Run, then it will try to automatically create a new Payroll Run for you, based on the last closed one.
The Default Pay Frequency for the open run will be the company default. For example, if you have configured the Default Pay Frequency on the Payroll Service Setup page to be “Monthly”, then the Payroll Run will default to “Monthly”.
Step 3: Choosing Employee for the Payroll Run
Employees in the Payroll Run are automatically added when the Payroll Run is created or when the Pay Frequency has changed.
The employees are automatically added if their Pay Frequency matches the Pay Frequency of the Payroll Run. For example, let’s consider a scenario of two employees:
- Bob, set up with a “Monthly” Pay Frequency
- Josie set up with a “Bi-Weekly” Pay Frequency
If the Pay Frequency on the Payroll Worksheet is set up as “Monthly”, then Bob will automatically be added, but not Josie.
If the Pay Frequency on the Payroll Worksheet is setup as “Bi-Weekly”, then Josie will automatically be added, but not Bob.
If the Pay Frequency on the Payroll Worksheet is setup as “Weekly” then neither Bob nor Josie will be added automatically.
- Mark the Employee record as ‘Inactive’ on the Employee Card if the employee is no longer active.
- Mark the Employee with the correct Pay Frequency, if the issue is that they have an incorrect Pay Frequency defined.
- Manually remove the pay stub in the Payroll Worksheet. You may need to remove this employee, as the Payroll Worksheet will attempt to automatically add missing employees in specific steps to help ensure that everybody that should be paid in the run will be paid.
Step 3: Setting the Payroll Run Specifics
The Payroll Run in the worksheet will automatically open the active unposted run, or automatically start preparing the next Payroll Run for you.
The Pay Frequency will be set to the Default Pay Frequency defined in the Payroll Service Setup. When you change the Pay Frequency, you may be prompted to remove any existing pay stubs.
Any employees that are configured with the new Pay Frequency will be automatically added to the run.
The Pay Date will attempt to automatically set itself to the next estimated Pay Date, based on the previous Pay Date and your chosen Pay Frequency.
For example, if the last Payroll Run was on March 30th, and the Pay Frequency is set to “Monthly”, then the next Payroll Run should default to April 30th.
Make sure the Pay Date reflects the date you are paying your employees, and change the estimate if it does not match. (i.e. Pay Date default is on a weekend or other non-banking day)
The Pay Date is automatically estimated, the Period Starting and Period Ending Dates will also be automatically estimated based on your last Payroll Run.
Please ensure that the Period Starting and Period Ending Dates satisfy your company requirements.
Note: If you have hourly employees, and they are using the Dynamics 365 Business Central Time Sheets feature to enter hours, then the Period Starting and Period Ending Dates will affect the time range that is used to gather approved hours.
Step 4. Collecting Hours
This step is only necessary if you have hourly paid employees.
If your employees are all salaried, then you may skip this section.
Whether you are using Dynamics 365 Business Central Time Sheets, or if you are entering hours manually, the following requirements apply:
- All pay codes must have a rate defined.
- If a rate is defined at the employee level, it will be used.
- If no rate is available at the employee level, then it will use the default rate defined at the pay code level.
- To see an hourly pay code on the worksheet, you must set the pay code to be either:
- “Show Hours”, or
- “Show Hours and Rate”
In order to ensure the insurable hour are tracked for salary employees without causing additional pay, the following requirements must be met:
- The Salary Hours Per Pay Period field must be filled in on the Employee Card.
- If Dynamics Business Central Timesheets are used, the following tasks must also be completed.
- o All pay codes used by salary employees for regular hours must be distinct
from hourly employees and must have a default rate of 0
o The regular hour’s pay codes must be added to the Salary Paycodes field
in the Payroll Setup page
o If the employee is to be paid for overtime hours the pay codes must have
a rate defined.
o If the overtime hours are insurable, they should not be included in the
Salary Paycodes field in the Payroll Setup page.
To configure Time Sheets for a Resource, refer to the Microsoft Documentation for Dynamics 365 Business Central “How to: Set Up Time Sheets”.
To use hours entered in Time Sheets, choose “Get Hours from Timesheets” on the Payroll Worksheet page.
The following conditions must be met for hours to be collected from a Time Sheet:
- Only hours that are within the Period Starting Date and Period Ending Date are added.
- Only hours that are approved are added.
- Hours are only added for Resources that are
- associated with an Employee,
- the associated Employee has a status of “Active”, and
- the associated Employee is configured with a Pay Type of “Hourly”.
- All time on the Time Sheets must have a Work Type set.
- All Work Types that are used on Time Sheets must have an appropriate mapping to an hourly pay code. Refer to the setup guide for setting up hourly pay codes.
- All requirements from General requirements for Hourly Employees and Pay Rates apply.
- If hours are changed on the Time Sheets after you have gathered hours from Time Sheets, then the hours on the Payroll Worksheet must be refreshed manually. To do this, choose “Get Hours from Timesheets”, or enter the corrections manually.
Note: If you change hours on the Payroll Worksheet, the hours will not be transferred back to the Time Sheets.
Step 5. Entering Hours for Hourly Employees without Time Sheets
If you have hourly employees, but don’t use Time Sheets, you can still enter hours. Do note that all requirements from General requirements for Hourly Employees and Pay Rates still apply.
To enter time manually, enter hourly values for each employee on the Payroll Worksheet.
There is no automatic breakdown of hours entered for overtime or double time based on shifts. If an employee has worked overtime and/or double time, then you must split the hours manually.
If the overtime and double-time pay codes are visible on the Payroll Worksheet, then you can split the time directly on the worksheet. If they are not visible, then choose Split Time. A new page will open, enabling you to enter new hourly times for the employee. To split the overtime and double-time hours on the Time Sheets, you must have appropriate Work Types for each configuration. Canadian Payroll will automatically create three different Work Types to help with that categorization.
Step 6. Split Time
When the Split Time screen is used, it converts some of the time on a time card line to a different pay code, activity code, etc.
When a line is split, you can specify the amount of time to add to the new line, along with the new Pay Code.
When the line is split, a negative entry is created against the original line to offset the new line.
In this example, the employee has 40 hours of Regular time in the payroll Worksheet, however, 8 of that should be in Stat Regular.
When you click on the Split Time icon, the system automatically creates two lines for 20 hours each. Simply modify the lines so that the Current Total equals the Hours Total.
Then click on the Commit icon to save the changes and close.
When you return tot he Payroll Worksheet, you will see the changes.
You can then continue with the payroll process.
Step 7. Validate Payroll Setup
To ensure that the setup information is correct, choose “Check for Issues” on the Payroll Worksheet. This action will open a validation helper page and attempt to list potential issues. This does not ensure that rates and employee information are accurate. For example, the validation can help identify that a rate is missing, but not that a rate should be $10 per hour instead of $15 per hour.
Problems that need to be addressed are shown as notifications with links to the appropriate Employee record.
The following notation appears on the validation helper page and indicates that there are no errors per the set-up information.
Step 8. Calculating Gross Pay
After you have entered any time for hourly employees, and after you have validated for potential issues with using Check for Issues, you can “Calculate Gross Pay”.
For hourly employees, this will multiply the hours available by the rate for the Hourly Pay Code for the employee.
For salaried employees, this will use the Gross Pay Per Period from the Employee Card.
A detailed breakdown of all income sources is available in the sidebar and is also available by choosing Income Details on the Actions tab.
The gross pay for each employee for the pay period should be reviewed for accuracy and errors before proceeding to the next step.
Step 9. Calculating Taxes and Deductions
After you have verified that the gross pay for each employee is accurate, click on the “Calculate Taxes” action.
This will use the details supplied in the employee payroll configuration, and the current gross pay to calculate deductions such as CPP, EI, QPP, etc.
If the employment province is in Quebec, then QPP and QPIP will be calculated as well, if the default setting is on Deduct.
Review the calculated values for any potential issues.
Step 10. Transfer to Journals
After the tax amounts, have been calculated, the next step is to transfer the information to the Payment Journal and General Journal. Choose “Transfer to Journals” on the Payroll Worksheet.
This will create the appropriate entries in the Payment Journal for employees, and create entries for your deductions such as CPP and EI in the General Journal. After the entries have been transferred, the Payment Journal will automatically open.
If you are paying employees with Manual Cheques, and have already entered the manual check numbers on the Payroll Worksheet, then these will transfer to the Payment Journal.
If you are paying employees electronically, then the corresponding employee will automatically be entered on the Payment Journal line, underneath the Vendor-related columns.
Note: Payroll for Canadian Payroll automatically creates a Vendor record for Employees that need to get paid, and can also automatically create a default ‘PAYROLL’ bank account for that Employee.
Refer to the Microsoft Documentation for using the Payment Journal (https://docs.microsoft.com/en-CA/dynamics365/financials/payables-manage-payables).
If you are paying an employee with either manual cheques or with computer cheques, then the check number from the Payment Journal will automatically update the pay stub cheque reference.
If you are using manual cheques, you can also pre-define the cheque no. in the Payroll Worksheet, and then when you transfer to the Payment Journal the cheque no. will transfer across. This feature is not compatible with Electronic Payments, or with Computer Cheques.
Click on the Post to post the Payment Journal. This feature will finalize the journal by posting the amounts and quantities to the related accounts in your company General Ledger.
The following page will appear to indicate that the transaction was successful.
Or click on “Post and Print”. This feature will finalize and prepare to print the document or journal. The values and quantities are posted to the related accounts. A report request window will appear where you can specify what to include on the printout.
Close this page when finished.
Step 11. Posting the General Journal
After the Payment Journal has been posted, the next step is to post the corresponding expense and liability entries.
Open the Payroll General Journal by choosing Open General Journal in the Payroll Worksheet on the Actions Tab.
All entries should balance to 0. If they do not balance to 0, then review the payments, deductions, and deduction setup.
Reclassifications and changes can be made at this time, before actually posting.
The expense and liability entries will be grouped by the type and by the appropriate dimensions. Refer to the Dimensions section in the Canadian Payroll Setup and Configuration Guide for a review of how Dimensions can affect General Journal entries.
Step 12. Printing Pay Stubs
Pay stubs can be printed anytime. However, if they are printed prior to the Payment Journal has been posted, then the printable pay stub will have a message on it indicating that it is being printed before the employee has been paid.
Click on the “Print Current Stubs” icon from the Actions tab and the following new page will appear.
By populating the various fields you are defining how the pay stubs are printed and where they are printed.(PDF, Word document or Excel document)
Step 13. Closing the Payroll Run
Once all employees in the Payroll Run have been paid, and all journal entries have been posted, then you can close the Payroll Run. Click on the “Close Run” Icon
If you have not yet posted the Payment Journal or General Journal lines, then you will be prevented from closing the Payroll Run. This feature exists to help you remember to pay employees.
As soon as you close the Payroll Run, the Payroll Run for the next Pay Period for the Default Pay Frequency will automatically be created. You can leave this in its current state until it’s time for the next Payroll Run to be processed.
Step 14. Additional Information
For additional information please refer to these topics and more:
- Configure Workers Compensation Board Accruals
- How to use Dimensions
- Set up for RL1
- Create Revenue Quebec Remittance
- Payroll Time Entries Report
- Produce an Off-Cycle Pay
- Make a Severance Payment
- Configure Vacation Accrual and Payout
- Create an RRSP Deduction and Contribution
- Deductions Report
- Produce Payroll Register Report
- Update TD1 and TD1P for year-end
- Year-End Checklist
- Create and Submit T4 Slips
- Employee Self Service
- Create CRA Remittance Report
- Issue an ROE
- Create a Reimbursement
- Make a Salary Adjustment
- Add a New Pay Code
- Set up a Garnishment
- Historical Paystubs
- Additional Deductions Setup
- Process a Retroactive Payment
- Process a Commission Payment
- Process a Bonus Payment