Costing in payroll refers to the process of tracking and allocating all expenses associated with paying employees to specific accounts or cost centres within your business.
This practice is essential because it ensures that every payroll related cost is accurately recorded and sent to your account system with accurate codes.
This article will walk you through setting up a basic cost centre for your employees. You'll be able to allocate payroll costs to different departments.
There are lots of different terms for these groupings: some people call them cost centres, or they could just be 'departments' or groups within your business. It really is just the same thing in this instance - we're going to create a tagset in PaySauce that can effectively be used to group employees and then distribute their cost as you need.
We'll refer to these as 'departments' in this article as that's what lots of our customers call them, but you might refer to them as something else and that's okay too!
Set up the Home Department tags
Go to your company settings by clicking on your company name in the top left, then select the Settings tab.
Select 'Tagsets' from the menu.
Click the + icon on the top right corner of the 'custom tagsets' section.
Enter the name that you want to use to refer to the groups of departments. This could be 'department', 'region', 'location', etc - however you split up groups of staff for your costing purposes.
Select a colour if you wish.
Select what will be assigned to this grouping in 'can tag' - in this case, it will be employee.
Select what options the department grouping needs to link with. For this use case, we're selecting 'employees' and 'report'. Click outside of the drop down menu when you're done to collapse it.
Now we'll start creating the different departments that you need.
Click 'add tags'.
Enter the name of the department in both the label and value field. For example, you may have departments called 'Sales', 'Factory', etc.
You can only create one tag at a time. If you need to create another tag immediately after saving one, check the 'create another tag' box before you click Ok.
Continue until all the tags have been created. You can add more later, and rename them if needed.
Click the Close button when you have finished.
⚠️ Click the OK button at the bottom of the Tagsets screen before leaving this window.
Set up the Costing Template
Now we are going to define how we want to cost our departments.
Stay in company settings (or navigate back there) and select 'Templates' from the menu on the Settings tab.
Click the + icon on the right of the templates table.
Enter a name for your template. If you have called your groups 'departments', then a good name would be 'Department Costings' just to make it clear this is the set up of the costing relating to the departments.
Select 'costing' in the template type menu and click Ok.
In the 'cost with' drop down, select the tagset you created before (e.g. Department).
If you want KiwiSaver company contributions to all go to one cost code, select 'group all to one cost'. If you want it split between the departments that the employees are in, select 'Split according to Cost With'.
You do not need to make a selection for the Pay Advance split costing.
For 'select multi level tags', we recommend you select yes. This allows you to create further costings later if needed.
You can come back and edit this costing template if you need to later.
Apply the departments to employees
Now we want to assign a department tag to each employee so they will be in the right group.
Go to Employees and select an employee name from the list.
On the 'details' tab, click on 'Tagsets' on the menu.
Next to Department (or whatever you named your grouping option) select the correct tag for the department the employee is in, then save.
If you want to apply tags to lots of employees in one go, follow these steps:
Go to Employees and select 'Bulk Actions' in the middle of the screen.
Select 'tagset update'
Select the employees you want to update, then apply the correct tags.
Apply the costing template in the pay run
This is the last step. We need to apply the costing template you have created to your pay period set up.
Go to Run a Pay, and click the edit pencil icon next to the pay period date to edit your pay cycle settings.
Scroll down to 'Costing' and select the name of the costing template you created.
Click Ok to save.
You'll be able to see how your pay run is being split between departments when you're on the finalise screen by going to the 'costing' tab.
If you want to download a report of your department costs, you can click the down arrow in the right hand corner of that breakdown to download the report of your choosing. The detail report will download as a csv.