Deduction
Last updated: 2026-03-29
Deductions Overview
The Deduction module allows you to manage amounts that are subtracted from an employee's paycheck. You can create standard deduction rules (like taxes, health insurance, or union dues) and assign them to specific employees for a set period of time.
When Do I Use This?
- When setting up company-wide payroll deductions, such as standard health insurance premiums.
- When an employee takes an advance or loan, and you need to deduct a fixed amount from their salary for the next few months to repay it.
- When applying mandatory government taxes or contributions to an employee's pay.
How To Use
1. Creating a Deduction Type
First, you must define the rules for the deduction. You only need to do this once per deduction type.
- Navigate to the HR or Payroll section from the main menu.
- Select Deduction Types.
- Click + New.
- Enter a Name for the deduction (e.g., "Health Insurance").
- Choose how it is calculated by entering either an Amount (fixed money) OR a Percentage (of their salary).
- Select the correct accounting ledgers for the Expense Account and Payable Account.
- Click Save.
2. Assigning a Deduction to an Employee
Once a Deduction Type exists, you can apply it to an employee's job profile.
- Navigate to Employee Deductions.
- Click + New.
- Select the employee's Job.
- Select the Type of deduction you want to apply.
- Set the Start Date (when the deduction should begin) and End Date (when it should stop).
- Click Save.
Field Descriptions
Deduction Type Fields
These fields define the rules for a specific kind of deduction.
| Field Name | Description |
|---|---|
| Name | The title of the deduction (e.g., "Staff Loan Repayment", "Income Tax"). This is what appears on payslips. |
| Amount | A fixed monetary amount to deduct every pay period. Leave as 0 if you are using a percentage. |
| Percentage | A percentage of the employee's salary to deduct. Leave as 0 if you are using a fixed amount. |
| Expense Account | The financial ledger where the company tracks the cost of this deduction. Ask your accountant if you are unsure. |
| Payable Account | The financial ledger holding the deducted money until it is paid out (e.g., paid to the government or insurance provider). |
| Note | Any internal notes explaining the purpose of this deduction type. |
Employee Deduction Fields
These fields are used when applying a deduction to a specific staff member.
| Field Name | Description |
|---|---|
| Job | The specific employee and job position this deduction applies to. |
| Type | The Deduction Type rule you want to apply to this employee. |
| Start Date | The date the system should start taking this money from the employee's paycheck. |
| End Date | The date the deduction stops. For ongoing deductions (like taxes), this can be set far into the future. |
| Note | Specific details regarding this employee's deduction (e.g., "Loan repayment for car repairs"). |
Tip: Always double-check with your Finance or Accounting department when selecting the Expense Account and Payable Account on a Deduction Type. Choosing the wrong accounts can cause errors in your company's financial reports!
Tip: If an employee gets a raise, any deduction set up as a Percentage will automatically adjust the deducted amount. Deductions set as an Amount will remain at the fixed dollar value.