Affinity ERP USA Payroll Year-End Procedures Human Capital Management Suite

Affinity ERP USA Payroll Year-End Procedures Human Capital Management Suite Harris Healthcare (Version 5.0 December 2016)

What s Inside What s Inside... 2 Overview... 3 Phase 1 Year-End Preparation... 3 Phase 2 Year-End Close... 3 Phase 3 Prepare Employee Year End Slips (W-2s/1094-Cs/1095-Cs)... 3 Phase 1 Year-End Preparation (Performed Immediately)... 4 Step 1: Ensure your accumulator codes are set to reset properly at year-end... 4 Step 2: Review employee year-to-date balances and adjust if necessary... 4 Step 3: Create your new pay period schedule... 5 Step 4: Enter the statutory holidays for the upcoming year... 6 Step 5: Verify EIN Numbers, State ID and UI Account numbers for each company code... 6 Step 6: Modify Federal tax formulas to reflect rate changes (if any)... 6 Step 7: Modify State tax formulas to reflect rate changes (if any)... 7 Florida, Texas:... 8 Illinois:... 8 Kentucky:... 8 Louisiana:... 9 Wisconsin:... 9 Step 8: Modify Local, School District, City, County tax formulas for rate changes (if any)... 9 Step 9: Update the maximum earnings for Social Security... 9 Step 10: Adjust other formulas to reflect rate changes for the upcoming payroll year... 10 Step 11: Review employee setup and modify if needed... 11 Phase 2 Year-End Close... 11 Step 1: Make a backup of your payroll system.... 11 Step 2: Close payroll for the year.... 11 Phase 3 Prepare Employee Year End Slips... 12 W-2 s... 12 1094-C/1095-C s... 12 Harris Healthcare Page 2 of 12

Overview There are three phases to the payroll year-end process in the Affinity ERP Payroll processing system: Phase 1 Year-End Preparation Update your benefit, deduction, and tax formulas in preparation for the upcoming payroll year. Ensure your accumulator codes are set to reset properly at year-end, and upgrade to the latest version of Affinity ERP software. These steps should be performed in December as soon as the required information is available. Phase 2 Year-End Close Close the payroll for the newly completed payroll year, reset accumulator balances, and prepare for processing the first payroll of the upcoming payroll year. Perform these steps after the last payroll batch of the newly completed year is posted and prior to beginning the first payroll batch of the new payroll year. Note: If you are planning to run any adjustment or exception batches to correct figures for W-2s, this must be done PRIOR TO Year End Close. Year-End close occurs sometime between the middle of December and the middle of January, depending on your pay period schedule and pay frequency. If the pay date (the date the employees receive their checks/deposits) is in January, the pay period is considered part of the next tax year even if the pay-end date (the last day of the pay period) is actually in the prior year. Phase 3 Prepare Employee Year End Slips (W-2s/1094-Cs/1095-Cs) This phase is performed during the first two months of the new year. The deadline for submitting W-2 summaries to the Internal Revenue Service (IRS) is February 28 each year. The deadline for providing 1095-C slips to employees is January 31 and the deadline for submitting the 1094-C transmission summary to the IRS is February 28 (March 31 if filed electronically). The functions of preparing employee W-2 slips and Forms 1095-C/1094-C are performed in the Affinity ERP Statutory Reports module. Step-by-step instructions for preparing these submissions are contained in separate user guides which will be provided in early January. Harris Healthcare Page 3 of 12

Phase 1 Year-End Preparation (Performed Immediately) Step 1: Ensure your accumulator codes are set to reset properly at year-end The accumulator codes that have their year-to-date balances reset at payroll year-end are configured in Affinity ERP Payroll Manager in the Accumulator window (found on the Payroll Codes tab). Accumulators with Zero on Dec. 31 marked will have their YTD balances reset to zero when year-end close is performed. Take a moment to review the Zero on Dec. 31 field on each accumulator to ensure that all accumulators that should be reset at year-end have been selected. Since the balances for hours, earnings, benefits and deductions are typically reset at payroll year-end, the majority of accumulators should have Zero on Dec. 31 checked. However, please pay careful attention to BANK or ACCRUAL type accumulators. These types of accumulators include vacation banks, sick banks, overtime banks, seniority counters and accounts receivable balances. Accumulators containing bank balances normally should NOT be reset at year-end. If you are unsure as to whether a particular accumulator should be reset at year-end, please contact Ormed Support Services for guidance. A good way to review your accumulator resets is to use a simple Crystal Report that lists accumulator codes, descriptions, type, and the year-end reset fields. Sort this report in different ways to ensure nothing has been overlooked. The Crystal Library contains a template that can be used for this purpose. Go to HCMS\Report Library to locate this report if you do not already have it attached to your system. The report is named Zero Out on Dec31.rpt and shows the settings for each accumulator. Alternatively, you can easily build your own report using the PAYACMCD table. We recommend including the following fields in the report: ACCUMCD, ACCUMDESC, ACCUMTYPE, T4BOX (which lists the W-2 box that an accumulator will map to), W_2_BOX12_CD, FISC_RESET. The FISC_RESET will have a 1 or a 0 in it. 1 means Yes, clear out on Dec 31 while 0 means No, do not clear out. Note: When you close the payroll for the year, a year-end batch will be created, zeroing out any accumulators that are set to Zero at Dec. 31. If you intend to run any payroll adjustment or reversal batches, this should be completed BEFORE closing the payroll for the year. Step 2: Review employee year-to-date balances and adjust if necessary Adjust employee year-to-date balances using appropriate entries on the employee s final timesheet for the year. For example, if items were paid through Accounts Payable that need to be reported on W-2s, then the values can be entered manually. Or, if your site is self-insured for Health Premiums and the final employer paid values are not known until year end, then these can be entered in the final pay period of the year for inclusion in box 12 of the W-2. If you have a large number of final adjustments to make, considering importing a spreadsheet into the Pre-Processing screen for inclusion on the final pay period of the year. Harris Healthcare Page 4 of 12

Individual adjustments to W-2 values can also be made before finalizing your W-2 slips in the Statutory Reports module. However, adjustments made through the regular payroll processing function are easier to audit as they have corresponding timesheets and historical payroll registers. One of the easiest ways to review final balances is to use a report template built from the ov_hrms_max_hist_ytd_value view, which shows the most current year to date value for any given accumulator for each employee. Step 3: Create your new pay period schedule If you are integrated with the Affinity ERP General Ledger module, ask your finance department to create the new Fiscal Period table for the upcoming fiscal year before creating your pay period schedule for the new payroll year. This ensures that the system can map each payroll period to the appropriate fiscal period(s) in the general ledger when the pay period schedule is created. If Finance cannot update your GL Fiscal Period table prior to building the pay period schedule for next year, you can still proceed. You will merely have to rebuild your pay period schedule midway through next year to map to the updated General Ledger Fiscal Period table once it is available. The Pay Period Schedule is located in Payroll Manager, on the Process tab. To build a new pay period schedule: 1. Review the Pay Period Schedule table. If the new pay period schedule has already been built, proceed to Step 4 Create your new statutory holiday schedule. Otherwise, continue. 2. Enter the Payroll Ending Date of the first payroll to be paid next year. Hint: Look at the final pay period in the existing table and extrapolate from there. 3. Enter the Payroll Pay Date of the first payroll of next year (the date that your employees will be paid). 4. Enter the Number of Pay Periods in the payroll year. (i.e. 12, 24, 26 or 27). 5. Click the Create Pay Schedule button and the new pay period schedule is automatically created. 6. Review the Pay Period Schedule dates that have been created to ensure they are correct. Pay particular attention to the last entry on the Pay Period Schedule. If the final payment date is more than two weeks from the end of the year, you may have chosen an incorrect number of pay periods. If you run a biweekly payroll and your payment date for pay period 26 falls on or before December 18th, then investigate whether or not your year actually includes 27 pay periods. If that is the case, delete the entire year s pay period schedule and recreate a new one starting at step 2, this time choosing 27 pay periods. 7. If a scheduled payment date falls on a bank holiday, edit it on this screen. Keep in mind that if you modify a payment date from January 1 to December 31 because of a bank holiday, you are actually moving that entire pay period into a different W-2 year. Be sure your pay period schedule accurately reflects the treatment of that cross-over pay period. Harris Healthcare Page 5 of 12

Note: As mentioned above, if your finance department has not built the upcoming General Ledger Fiscal Period table, the First Fiscal Year Periods, Split Dates and Second Fiscal Year Periods will only be completed for a portion of the year. This is okay. The Pay Period table can be rebuilt later in the upcoming payroll year (after finance has built the General Ledger Fiscal Period table). Step 4: Enter the statutory holidays for the upcoming year Your statutory holidays for the upcoming payroll year are set up in Payroll Manager. The Statutory Holiday icon is found under the Scheduling tab. There is no need to remove prior year entries to make room for the new ones. This table is configured to allow year after year data to be stored indefinitely. Sites that use the Time & Attendance products should also add the specific start and stop times for each holiday that generates automatic holiday premiums. These start and stop times are entered in Time & Attendance Manager. Step 5: Verify EIN Numbers, State ID and UI Account numbers for each company code Whether your site is a single legal company or a multi-entity organization, it is essential that the Employer Identification Number (EIN) be entered prior to running W-2s. Go to Payroll Manager >> Process tab and select the EIN Code screen. Each federal entity will have its own EIN Code assigned, which should map to the actual EIN number. Be sure that the State ID and UI Account number fields are also filled in, as these fields will be used during W-2 creation and Quarterly UI reports, respectively. Step 6: Modify Federal tax formulas to reflect rate changes (if any) A new federal tax bas module has been created for 2017. The new tax formula is named FITXFunc_2017.bas which contains the new tax rates for 2017. Installing this new formula requires a few simple steps: Obtain the new file (from the FTP site or email attachment) and save it to your network. Place the new file in your Formulas folder, within the subfolder named Calc. Since each formula has a distinct name, you should NOT receive any warning that the file will replace an existing one. Once the key formula has been saved to the network, create a link to it in Payroll Manager Formulas: 1. Go to Payroll Manager Accumulator and select the Federal Withholding Tax category. 2. Go to the Formula tab to locate the existing Federal Tax formula (likely FTAX or FITX, but accumulator name may vary by site). 3. Click New Entry to add a NEW formula for the Federal Tax accumulator with an effective date for your first pay period in the new year. The first date of the pay period (which often falls in December of the prior year) is a suitable date to use. Harris Healthcare Page 6 of 12

4. There are several fields that differ from site to site depending on the payroll model that you follow. Please review the existing Federal Tax from the prior year and ensure that these fields have the same values in them: a. Prorate On b. Calculate on All Employee Jobs 5. If desired, enter a description in the Purpose field. This is optional. 6. In the formula field, enter the exact name of the bas module that was provided to you, followed by a set of parentheses, as shown on the following screen print example. 7. Verify the installation. If you have successfully attached the new formula, you should be able to view the contents of the bas module by pressing the Formula Builder button and proceeding to the Formula Builder screen. Step 7: Modify State tax formulas to reflect rate changes (if any) If your State levies income tax, the rates may change from year to year. If this is the case, go to Payroll Manager Accumulator and select your State Tax category. Go to the Formula tab and select the State Tax formula (likely STAX or **TX where ** represents your 2 character state abbreviation(s), but accumulator name may vary by site). Click on Formula Builder to review and/or edit the formula contents. For your convenience, known changes to State taxes are listed below. Please confirm with your local state tax office before making any formula changes. Harris Healthcare Page 7 of 12

Florida, Texas: These states do not have any state tax. Illinois: At the time of printing, Illinois had not made any changes to tax rates for 2016. Should you become aware of any changes after receiving this document, please contact Support Services for assistance. Kentucky: There are no changes to the tax rates or tax brackets for 2016. However, the parameter values for Standard Deduction and Exemption Credits have changed. 2017 Standard Exemption = $2480 (2016 was $2460) 2017 Credit per Exemption Claimed = $10 (no change from prior year) The KYTXFunc.bas formula has two parameters to allow these values to be tracked in the main formula screen. Insert a new formula to reflect the parameter values for next year: 1. Go to Payroll Manager Accumulator and select the State Withholding Tax category. 2. Go to the Formula tab to locate the existing Kentucky State Tax formula (likely KYTX or similar, but accumulator name may vary by site). 3. Click New Entry to add a NEW formula for the State Tax accumulator with an effective date for your first pay period in the new year. The first date of the pay period (which often falls in December of the prior year) is a suitable date to use. 4. There are several fields that differ from site to site depending on the payroll model that you follow. Please review the existing State Tax from the prior year and ensure that these fields have the same values in them: a. Prorate On b. Calculate on All Employee Jobs 5. If desired, enter a description in the Purpose field. This is optional. 6. In the Formula field, enter the exact name of the bas module that was provided to you, followed by a set of parentheses containing the new parameter values, as shown on the following screen print example. Harris Healthcare Page 8 of 12

Louisiana: At the time of printing, Louisiana had not made any changes to tax rates for 2017. Should you become aware of any changes after receiving this document, please contact Support Services for assistance. Wisconsin: At the time of printing, Wisconsin had not made any changes to tax rates for 2016. Should you become aware of any changes after receiving this document, please contact Support Services for assistance. Step 8: Modify Local, School District, City, County tax formulas for rate changes (if any) Repeat the process from Step 6 and/or Step 7 as it relates to any local taxes in place at your site. Pay close attention to formulas that use parameters to hold key rates. Step 9: Update the maximum earnings for Social Security Note: There are no changes to Social Security and Medicare for 2017, other than the new Social Security wage base limit. Verify that you have the correct values as noted below, but no underlying calculation changes are required for 2017. Go to Payroll Manager Accumulator and select the Social Security Category and select the formula for Social Security Wages (SSWG). Accumulator codes can vary from site to site, so you may have a different (but similar) code instead. Most Social Security Wage formulas use a parameter for the annual maximum. If yours is set up this way, then press the NEW button to create a similar formula with the revised maximum value for the Harris Healthcare Page 9 of 12

upcoming year. It is essential that your new formula have the exact same formula reference as the old one, with only the maximum value between the brackets appearing different. (See circled area below). The new calculation formula can be given an effective date for your first pay period. From time to time, the government might also update the tax rates for Social Security and Medicare. While no changes were noted at the time of this document s creation, it is always advised to check the government publications directly in case of any last minute changes. If your formula does NOT utilize the parameter method of defining the annual maximum, then click on the Formula Builder button to access the maximum rates within the actual bas module and make any necessary edits there. Step 10: Adjust other formulas to reflect rate changes for the upcoming payroll year If your benefit plans or union contracts contain any changes that take effect at the beginning of the payroll year, modify your formulas to reflect these changes. Common examples include changes to rates and/or annual limits for Health Savings Accounts, Flex Spending Accounts, Retirement Plans, Workers Compensation, and/or Unemployment. Also, consider whether or not the upcoming year is one with a non-standard 27 pay periods. If so, any formulas that divide an annual allotment by 26 may need to be modified to use the 27 instead. Formula modifications are entered in the Accumulator Maintenance window, which is found on the Payroll Codes tab of the Affinity ERP Payroll Manager module. When making changes to formulas, you may need to make a new copy of the original formula with a new effective date for the modifications. This allows you to enter changes to formulas in advance of the pay period in which they take effect, without affecting the formulas already in place. If the existing formula is no longer required (i.e., there are no more payrolls to run that require the original rates), simply edit the existing formula. If you require assistance with modifications to your formulas or, if you require custom programming, contact Support Services for assistance. Harris Healthcare Page 10 of 12

Step 11: Review employee setup and modify if needed With the start of the new payroll year, consider whether the marital status, number of allowances or additional tax elections made by employees the prior year still apply. If any of these values have changed, make the necessary edits in Payroll Employee Manager. Often United Way pledges or other voluntary contributions are re-evaluated at the end of a payroll year. Review the Benefits screen and/or Unique Earnings & Deductions screen for employees participating in such plans and make any required edits to prepare for the new payroll year. Phase 2 Year-End Close The actual year-end close is performed after the last payroll batch of the year is posted, but prior to beginning the first payroll batch of the new payroll year. This occurs sometime between the middle of December and the middle of January, depending on your pay frequency and the actual dates your employees are paid. If the pay date (the date employees receive their checks/deposits) is in January, the pay period is considered to be part of the new W-2 year even if the pay-end date (the last day of the pay period) is actually in December of the year that has just ended. Note: When you close the payroll for the year, a year-end batch is created, zeroing out any accumulators that are set to Zero at Dec. 31. If you intend to run any year-end reports that are built using the ov_hrms_max_hist_ytd_value view, this must be completed BEFORE closing the payroll for the year. Step 1: Make a backup of your payroll system. Before performing the year-end close, ask your IT Department to make a backup of your payroll data files (the HCMS SQL database and the Formulas directory). Store these backups in a safe location until after your W-2 summaries have been sent to the IRS. A backup allows you to perform a complete recovery of your system in the unlikely event of a disruption during the year-end close process. Step 2: Close payroll for the year. Once you are confident that your accumulator settings are correct (as explained above), close your payroll system for the completed payroll year. To close your payroll system for the payroll year: 1. Launch the Affinity ERP Payroll module. 2. Go to the sidebar and click the Year End tab. 3. Click the Calculate icon. The Year End Calculation window opens. 4. Select the year-end date from the calendar for the pay period that the year-end batch will be posted to. Harris Healthcare Page 11 of 12

Note: Harris recommends that you select the first day of the first pay period of the new year, preventing possible conflicts with associated reporting which uses the pay period end date of the last payroll of the year that is ending. 5. The calculation creates a register containing negative entries to zero out the required accumulators. As such, you will have an audit trail of the values prior to the year-end close, as well as the adjustment that was required to bring the balance down to zero. All accumulators that have Zero on Dec. 31 checked off are reset to zero. Click the Calculate button to begin the register creation. 6. Once the year-end register has been calculated, review it online prior to finalizing the batch. Click the View Registers icon to launch the View Registers window. Print the registers, if desired. Note: The year-end batch registers can also be exported to a.pdf document for reference purposes. 7. If the registers appear correct, then the batch can be closed by posting it. Click the Post icon to launch the Posting window. You will notice that only one task is checked off for completion Update YTD Values. This means that the YTD values will be updated to reflect the year-end register activity. No other posting features are required for a year-end batch. 8. Click the Post button to complete the posting. 9. Congratulations! You have successfully completed your Year End Close. Phase 3 Prepare Employee Year End Slips There are several year-end slips that may be provided to employees: W-2 s Employee W-2 slips are prepared in the Affinity ERP Statutory Reports module. Step-by-step instructions for preparing employee W-2 slips and electronic downloads are contained in separate help documents and will be made available in early January. 1094-C/1095-C s Sites that are covered by the Affordable Care Act requirements can prepare Form 1095-C for employees and the accompanying Form 1094-C transmission summary using the Affinity ERP Statutory Reports module. Step-by-step instructions for preparing employee these ACA slips and electronic downloads are contained in separate help documents and will be made available in early January. Harris Healthcare Page 12 of 12