Entering paycheck in Moneydance

andersoj's Avatar

andersoj

11 May, 2009 11:11 PM

Hi...

I'm making a clean start with moneydance, and trying to sort out the best way to enter my paycheck information. I searched the FAQ/forums and was surprised that a search for "paycheck" didn't immediately turn up a solution.

I get a paycheck. It includes:

  • Pre-tax contributions to DCAP, HCAP, medical, dental, vision, and retirement
  • Employer-paid retirement contributions and medical
  • Automatic deposit to checking, savings, and investment accounts

1) How can I structure this so there is one logical "paycheck" somewhere that has all these numbers in the same place? Mostly I'll need to enter them manually from a printed PDF of my paystub

2) Is there any way to automate the bits of this that can be automatic (downloaded transactions, e.g.) I'll note that my retirement, for instance, seems hopeless to automate because Fidelity reports contributions to specific securities, which happens magically using their formula, but none of this is connected to the numbers on my paycheck (though they sum to the same total)

3) Is there a "workflow" that someone can point me to, the outlines an example procedure for "today I got my paycheck, so I want to update moneydance with all the details"

JA

  1. 1 Posted by Hans N. on 12 May, 2009 12:43 AM

    Hans N.'s Avatar

    You can enter in the transaction for your paycheck and have Moneydance memorize the transaction. There's all sorts of options with memorized transactions regarding how often it should reoccur, if you want Moneydance to enter it for you automatically, and whatnot.

    The initial transaction should utilize the Split function in the Category and be entered in the register for one of the accounts that receives the deposit.

    Here you can enter the gross pay as a deposit with it's own category, enter your individual pre-tax contributions with their own categories as payments, your deposits to other accounts as payments (using those accounts as the categories so they show up as deposits in those accounts), and even "payments" to your investment account before entering in separate Buy transactions in that investment account to reduce your cash balance and increase your securities holdings.

    I don't have the option to download my investment purchases, so I enter them in manually as I'm suggesting above, but the rest of my paycheck is automated.

    With the memorized transactions on the home page, you can click the one you want to enter and adjust it before recording the transaction, but if you already have all the splits in place, then it should just be a matter of editing the amounts.

  2. 2 Posted by andersoj on 12 May, 2009 02:02 AM

    andersoj's Avatar

    Thanks, this helped, but I've run into some complexity that I can't quite reproduce.

    In entering the split, I went to several of the accounts involved in the split to remove transactions that were duplicated with the addition of this transaction. In changing/updating categories, the "split" transaction seems to have fragmented into several parts. Now I can't find all the bits and pieces... if the payment came from an "income" account, is there a way I can look at the income account to see all the transactions coming out of it.

    I can't seem to open a register for any of the income/expense accounts -- is this the correct behavior?

    JA

  3. 3 Posted by Hans N. on 12 May, 2009 02:11 AM

    Hans N.'s Avatar

    No, can't view category registers from the dropdown account list. Instead, go to Tools -> categories and double click on one to find all the transactions hitting that category.

  4. 4 Posted by Hans N. on 12 May, 2009 02:15 AM

    Hans N.'s Avatar

    You could also try right-click on a transaction and select View Other Side.

  5. 5 Posted by andersoj on 12 May, 2009 02:27 AM

    andersoj's Avatar

    OK, so I open up the "Income" category for the "corporate payroll" income account. This category shows a single transaction that says "increase of $x.xx", the gross pay, which makes sense. However, it shows this as in the category of "checking", which is confusing because that gross number never goes into checking.

    Then, to find the paycheck details, I have to go to the checking account, which is actually where a minority of the paycheck goes. I do see the split there, and I think I've got the double-entry stuff set up correctly. I guess it's not straightforward that this "split" shows up in some random account, where most of the values aren't related to the account.

    Also, this doesn't capture the corporate contributions (not counted as part of gross pay, not counted in taxable income) so I have to create a separate split transaction for those items, but they go to a variety of places, none of which makes sense as a "paycheck" location.

    Is there a way to set up an account that captures the income/outflow associated with corporate payroll in one place, and doesn't put all the details in my checking account and other random categories of expenses?

  6. 6 Posted by Hans N. on 12 May, 2009 02:02 PM

    Hans N.'s Avatar

    With double-entry accounting, there's always two sides to every transaction. With your paycheck, look at it like two or more transactions in one.

    1) Your gross paycheck is deposited into your checking account, the second/other side of that transaction is for your paycheck to hit an income category. The fact that the same $ figure is being booked in two places is what makes this double-entry accounting.

    2) Your paycheck deductions are deducted from your checking account (reducing gross payroll to net payroll), and the other side are the various investment accounts, payroll tax categories, and other expense categories.

    Any time you're looking at a register with the Category field, the category is the other side of the transaction. So, while you're looking in the register for the Corporate Payroll income category, you're seeing your gross pay $ deposited into your checking account. You're right in that the gross amount never gets deposited into your bank account, but that's why the Split is used on this transaction and not reported in separate transactions. Your bank only sees the net amount being deposited so this is for tracing purposes. However, your gross pay is still income to you, despite the fact that taxes and whatnot reduce your paycheck. From an accounting standpoint, that makes sense in that your salary is your gross pay. So in order to track your paycheck expenses, you want to show that your expense came out of your gross pay and not out of your net pay, since the latter would be an understatement of your true income.

    The Split category thing makes sense, because from a cash perspective, your bank is only going to show the net amount being deposited into the account. The expense splits make sense, because each of the payroll deductions are for different things and you can decide to what level of detail you want to track those deductions. You are your own CEO, so you only need to track what's useful to you and Moneydance allows you that flexibility.

    With that said, it sounds like what's useful to you is to have one place where you can see all of the inflows and outflows of your paycheck without really using separate Categories for everything. I can think of three ways, off the top of my head, to accomplish this.

    1) You can continue to book things as you had done to their own category, but edit the expense categories to use another expense category as the parent (calling it Paycheck Deductions for example). This would group all of your individually tracked paycheck expenses under one parent Category.

    2) You could use the Description field to label the specific expenses and just book them all to the one expense Category.

    3) This might work best for you. Create an Asset Account for your payroll. Book the Gross Payroll amount to the Asset Account and then book all of the transactions as transfers to bank accounts, investment accounts, or expense categories. This method would keep the Asset account at a zero balance if done correctly, but you could break away from using the Split feature for the Category and just have everything booked as individual transactions, still allowing you to reconcile your bank accounts without trouble. Then the Asset Account register would be where you can view all of your paycheck related items.

  7. 7 Posted by andersoj on 13 May, 2009 12:49 PM

    andersoj's Avatar

    Excellent! I've created an asset account called "payroll holding" to handle this. I am still using splits for some transactions that make sense there. Basically, I have three transactions per paycheck (direct pay, employer-paid benefits, and employer-paid retirement contributions) which need to be treated separately for tax or other reasons. By putting them into an asset account that represents that fuzzball that makes up my pay statements, I can always find all the pieces of a paycheck in one place and verify that they are correct against paperwork, and trace where they go.

    The issue of matching up retirement contributions on the paycheck side with transactions in the retirement account is still a major hassle, and I don't know how Moneydance could even help. My employer puts contributions into several "source" categories (labelled A1, A2, A3, and B1, B2, B3 depending on matching,etc...). On the retirement side, Fidelity maps these onto fractional purchases of securities, but doesn't report any transactions that correspond to the source #'s. Getting it all to match up is currently a laborious manual process.

  8. 8 Posted by andersoj on 13 May, 2009 12:51 PM

    andersoj's Avatar

    I think there's a FAQ here somewhere... lots of folks have complicated paychecks to cope with, and it might make sense to have a FAQ that outlines several common approaches for handling this (from simple to complex). If someone perceives it as difficult to get started with entering their paycheck, that could be a barrier to acceptance of the Moneydance product...

    JA

  9. 9 Posted by Mary on 13 May, 2009 05:00 PM

    Mary's Avatar

    For what it is worth, here's how I set up my paycheck. I didn't want the gross to go into an asset account because it would report in my net worth.

    I get direct deposit of my net paycheck and a number of deductions.

    I set up categories as follows: Salary (income) = gross pay the rest are expenses: Fed tax, state tax, health insurance, 401k thrift, etc. These are sub-categories

    Net goes into my savings account as a memorized automatic transaction. I split the amount entering the gross as income to Salary and the rest of the items as expenses. The total left over is my net pay and that is deposited into the account.

    I have a 2nd automatic memorized transaction to transfer $X to my checking account.

    Then additional memorized transactions to buy the shares in my securities in the 401k thrift account. These numbers change each time so I manually fire off those transactions. The xfer to the thrift goes in from my paycheck as cash, the 2nd transaction buys shares from the cash.

    So, this is what I do each paycheck: The pay shows up in my savings & checking accounts automatically every 2 weeks. The gross salary, taxes, thrift all populated automatically - I do nothing.

    Then the day after I get paid, I check the share prices for my securities, click on the memorized securities buy transactions in the Reminders list, enter the correct share price and fix the dollar amount and enter.

    So far, this is reporting the correct amounts and tallying them up in my net worth correctly with a minimum of pain for me. For those times when I get a different pay amount, I just edit the salary transaction and correct the split amounts. I know I have it right when the gray total on the bottom of the split screen matches what my net pay is. I look at the Salary income category to see what my gross pay is for the time period of interest.

    I don't get matching $$ for the 401k but if I did, I would set up a separate income category to track those contributions separately from my salary gross and put that in as another + amount in the salary split since it is also income to me - maybe as another memorized transaction.

    I could be wrong in the way I do this, but perhaps others might have some ideas to share that are better. I think it helps if we share our methods.

  10. Angie Rauscher closed this discussion on 30 Apr, 2010 05:52 PM.

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