Biweekly payroll 2020

Hello @KSM0507 ,

Yes, every 11 or 12 years, you will have 27 pay periods on a bi-weekly payroll.  There are several different ways companies choose to handle this.

One is to leave the bi-weekly pay as it is.  But the company will have a higher annual payroll cost for that one year.  Also, you may have to make manual adjustments in Quickbooks payroll for CPP, and change limits for CPP, EI and WCB to accomodate 27 pay periods.    I'm not sure about QBO; I think they don't allow any changes to these things so I sincerely hope QBO payroll, standard or advanced, has allowed for the 27 pay periods every so many years.  In QB Desktop, which I use most of the time, the reason you would have to make adjustments for CPP is because QB is not smart enough to realize that you are paying an extra pay period, so it exempts another $134.62 from income before calculating the CPP on the final pay cheque of the year - the 27th.  In fact, it calculates this exemption on any unscheduled payroll you do - Bonus Cheques or otherwise, which causes the CPP to be wrong at the end of the year.

You would have to change the exemption in the calculation to $129.63 per pay, and then calculate the deductions and manually input them into each pay cheque.  This is the only way you get a proper CPP calculation and exempt $3500 for the year.  If you let QB calculate on it's own, it will calculate an exemption of $3,634.62 for the year, thus lowering the CPP deduction for the employee and the employer, which will likely show up on a PIER report at the end of the year.

Another way to handle this is to take an annual salary, divide by 27, and pay that amount for each period.  You will still have to do everything that you did in the first step above.  The only difference is that the employer's payroll costs will remain what they were as far as annual payroll costs go.

For hourly employees, you wouldn't adjust any wage amounts as they get paid for every hour they work, regardless.  But you still have to do the same steps for CPP, EI and WCB as above.

Whatever you do, you have to have it determined before the year in which it happens as you have to start with these adjustments in the very first pay period of the year.  For myself, I will have 27 pay periods in 2021 as our bi-weekly paydays are on a Friday and there are 27 Fridays in 2021.  Some people, if their bi-weekly payday is on a Thursday, would have their 27 pay periods this year, 2020.

It really complicates things and I wish QB would recognize any pay period over the 'normal' bi-weekly schedule (26 pay periods), and adjust it's calculations for CPP accordingly, but it does not.  Again, I haven't investigated this thoroughly in QBO, but I rather doubt that it is doing it properly for 27 pay periods.

You can go into your employees, pay employees and go to pay schedule and edit your schedule with a new name or create a new schedule.  Name your schedule and under how often will you pay your employees there is an option to pick 27 pay periods.

Hello @Mattnic ,

Yes, you're correct.  I have done that for 2021.

My dilemma was when I discovered only a few months in to 2020 that with the first pay of the 2021 being  Friday, Jan. 1, the actual day the employees would be paid would be Dec 31 (due to Jan 1 being a STAT), forcing 2020 into 27 pay periods.  This after I had already begun deducting CPP and taxes as though there would only be 26 periods.  Rather than having to do a bunch of manual calculations and adjustments to "correct" it for 2020, I opted instead to keep the official pay date of Jan 1/21, even though the employees received their pay the night before on the 31st.  For 2021, I am prepared for 27 pay periods.

But part of my last post still applies and is still a thorn in my side.  Once in awhile it is necessary to issue an "unscheduled" payroll cheque for various reasons.  As far as QB Desktop is concerned, it counts an unscheduled pay cheque as one of your pay periods for year, even if it is actually going to be an "extra" cheque, over and above the 12, 24, 26, 27 or 52 (depending on pay cycles) regular pay cheques there will be.  The result of this is that it deducts the CPP exemption the same way it does for a regular pay cheque.  I discovered at the end of one year when we issued an extra bonus cheque to all employees near the end of the year, that it had exempted an extra $134.62  ($3500 / 26), causing the CPP amounts to be wrong for every single employee for the year, because they had each received 27 pay cheques, one being the bonus cheque.  I had to go back and make all kinds of adjustments to get it right.  I would like to see QB Desktop remove the CPP exemption formula for unscheduled payrolls.

I guess the bottom line is that one can't always expect that the QB Desktop calculations for CPP will be correct because of this anomalie and must be aware that if there is an unscheduled payroll cheque at any time during the year for a bonus, retroactive pay or retroactive vacation pay, etc., one must override the CPP calculation so that an extra CPP exemption isn't applied to the year for that employee, resulting in a shortage of CPP for both the employee and the employer.