Humi Payroll greatly simplifies setup, remittance, and reporting of employee benefits, but in order to manage these benefits effectively, we recommend first gaining a basic understanding of taxable benefits.
Non-cash and cash benefits are set up differently in Humi Payroll as they often have different behaviours and tax implications. This guide will cover the steps to set up both types of benefits.
Each non-cash benefit should be set up in payroll based on the first effective date of the benefit. Prior to processing your first payroll with Humi, it is important to allot enough time to ensure the benefits are set up correctly.
For example, if the plan is effective February 1st and the payroll schedule is semi-monthly, benefits need to be set up before the Feb 1st - 15th pay period’s pay day, which is normally Feb 15th.
If a new employee starts on February 1st with a 3-month waiting period, benefits need to be set up before the May 1st- 15th pay period’s pay day, which is normally May 15th. Also note that in this example because of the mid-month effective date, most benefit carriers do not prorate but will still charge for the benefits.
This helps identify the different benefits and the premium monthly. Note that if you are located in a province with sales taxes, the benefit must include the tax amounts.
It is important to distinguish between taxable and non-taxable benefits. Adding non-taxable benefits to payroll is optional as no statutory deductions are calculated, and could become an additional burden to managing payroll.
There are four main components to setting up and paying a non-cash benefit:
There are two types of annualized benefit amounts you can enter for each employee who is assigned to a benefit:
Employee Premium - benefit amount that the employee pays and is deducted from the employee’s gross pay.
For example, if the employee’s own contribution to life insurance plan is $10 per month, the annualized amount for employee premium would be $10 x 12 = $120 and the amount entered here would be 120.
Company Contribution - benefit amount that the company pays and is contributed to the employee’s gross pay.
For example, if the company contributes $8.50 per month to the employee’s life insurance plan, the annualized amount for company contribution would be $8.50 x 12 = $102 and the amount entered here would be 102.
It is also common for both the employee and the company to split up a benefit’s cost. In this case both the employee premium and company contribution would be present.
Once the benefits are set up, each payroll period Humi Payroll will automatically include the relevant amounts in its calculation for every employee’s earnings and deductions.
Each payroll’s deduction amounts are usually calculated during a the payroll’s review stage. This is a stage where we recommend payroll admins to export a Payroll Register report and confirm that amounts calculated for the payroll are accurate for each employee.
Some common scenarios that imply a change to benefit amounts include:
It is important to verify that these changes are reflected in the benefits that are set up in Humi Payroll, and that any amounts that are modified are accurately reflected in the period’s payroll for applicable employees.Important considerations before setting up a benefit