In the processing of payroll, you can set up various types of incomes in R365, which are classifications of employee payment methods. This article will help you to understand the following:

  • the various supported income types
  • where to view tax settings for each income item
  • how each is used in payroll calculations
  • where employees and managers can apply them

To view your income settings, go to Admin > Company Settings > Incomes:


Income Types


Dollar

The dollar income type is an amount paid to the employee regardless of the number of hours they work. See below for an explanation of each key value on the income item record.


NumberValueExplanation
1Description

A system-specific label for the income item record. This value is visible on reports and appears throughout the system. Each value must be unique.

2Abbreviation

A system-defined abbreviation for the Description. This value is used for column headers in CSV imports. It's used to import data into step 4 of the payroll batch (Time Entry). Each value must be unique.

3Check

This value determines whether the income item is included in employees' scheduled check payments, or whether the system generates a separate check payment for the income item. You can find it on step 2 of the payroll batch (Select Earnings and Deductions). The default value (1) indicates inclusion of the income item in the scheduled check payment. Click + to modify the value (2) and separate the income item into a distinct check payment.

4Misc InformationDisplays rules about how and where the system uses the item and implications for user interaction.


Recurring

Recurring refers to a dollar amount that the system pays to employees on a scheduled basis. You can enter it on the employee record at Rates & Deductions > Scheduled Earning. It appears in step 3 of payroll batch creation (Confirm Batch Details). This income item is included in the payroll batch based on the Payroll Run Type value found here (Scheduled indicates recurring). See below for an explanation of each key value on the income item record.


Number
ValueExplanation
1Description

A system-specific label for the income item record. This value is visible on reports and appears throughout the system. Each value must be unique.

2AbbreviationA system-defined abbreviation for the Description. This value is used for column headers in CSV imports. It's used to import data into step 4 of the payroll batch (Time Entry). Each value must be unique.
3Check

This value determines whether the income item is included in employees' scheduled check payments, or whether the system generates a separate check payment for the income item. You can find it on the Select Earnings and Deductions screen (step 2 of the payroll batch). The default value (1) indicates inclusion of the income item in the scheduled check payment. Click + to separate the income item into a distinct check payment (value 2).

4FrequencyThis value refers to the income payment frequency. It can be:
  • E - applied to every payroll (scheduled or unscheduled, regardless of Payroll Run value)
  • F - applied to the first scheduled payroll run of the month
  • S - applied to the second scheduled payroll run of the month
  • C - applied to scheduled payroll runs only (as opposed to unscheduled)
  • I - applied to scheduled payrolls that aren't the fifth payroll run of the month (for weekly payroll) or the third payroll run of the month (for bi-weekly payroll)


Note that the system considers salary to be Scheduled Payrolls Only income item.

5Misc InformationDisplays rules about how and where the system uses the item and implications for user interaction.


Hour

Hour income types are used to pay hourly employees with an associated rate of pay. You can use them to calculate overtime. See below for an explanation of each key value on the income item record. 


NumberValueExplanation
1Description

A system-specific label for the income item record. This value is visible on reports and appears throughout the system. Each value must be unique.

2Abbreviation
A system-defined abbreviation for the Description. This value is used for column headers in CSV imports. It's used to import data into step 4 of the payroll batch (Time Entry). Each value must be unique.
3Check

This value determines whether the income item is included in employees' scheduled check payments, or whether the system generates a separate check payment for the income item. You can find it on the Select Earnings and Deductions screen (step 2 of the payroll batch). The default value (1) indicates inclusion of the income item in the scheduled check payment. Click + to separate the income item into a distinct check payment (value 2).

4Pay Rate to UseThis value can be any of the four Hourly Rate values on the employee record under Rates & Deductions. You can use these values in conjunction with a Base Rate Multiplier value (see below). For more information about how to set up Hourly Rate values, see "R365 Payroll: Employee Records".
5Base Rate MultiplierThis value is used to calculate an employee's rate of pay beyond the standard rate, as in overtime pay. For example, overtime = Hourly Rate #1 x 1.5. In this example, 1.5 is the Base Rate Multiplier.
6Misc InformationDisplays rules about how and where the system uses the item and implications for user interaction.


Unit

Unit income types are used to pay employees for work that changes amount or duration, measured by a specific a variable, such as mileage reimbursement for travel. They're associated with a rate of pay (on the employee record, under Rate & Deductions, Hourly Rate values 2-4). They aren't used to calculate overtime. See below for an explanation of each key value on the income item record. 


NumberValueExplanation
1Description

A system-specific label for the income item record. This value is visible on reports and appears throughout the system. Each value must be unique.

2Abbreviation
A system-defined abbreviation for the Description. This value is used for column headers in CSV imports. It's used to import data into step 4 of the payroll batch (Time Entry). Each value must be unique.
3Check

This value determines whether the income item is included in employees' scheduled check payments, or whether the system generates a separate check payment for the income item. You can find it on the Select Earnings and Deductions screen (step 2 of the payroll batch). The default value (1) indicates inclusion of the income item in the scheduled check payment. Click + to separate the income item into a distinct check payment (value 2).

4Pay Rate to UseThis value is tied to the Frequency value and can be Hourly Rate 2-4 values on the employee record under Rate & Deductions. Examples include mileage reimbursement, deliveries per drivers, rooms cleaned for housekeeping, etc. In these scenarios, enter the number of miles, deliveries, rooms, etc. in the Hourly Rate value.
5Base Rate MultiplierThis value is used to calculate an employee's rate of pay beyond the standard rate. For example: 1.5.
6Misc InformationDisplays rules about how and where the system uses the item and implications for user interaction.


Tip & Gratuity

Tip & gratuity income items determine how employees earn wages from customer payments additional to their employer pay rate. All tips are added to gross pay for tax calculations, but cash tips are removed from net pay. Credit card tips are added to gross pay for tax calculation, as well as paid in net pay. See below for an explanation of each key value on the income item record. 


NumberValueExplanation
1Description

A system-specific label for the income item record. This value is visible on reports and appears throughout the system. Each value must be unique.

2Abbreviation

A system-defined abbreviation for the Description. This value is used for column headers in CSV imports. It's used to import data into step 4 of the payroll batch (Time Entry). Each value must be unique.

3Check

This value determines whether the income item is included in employees' scheduled check payments, or whether the system generates a separate check payment for the income item. You can find it on step 2 of the payroll batch (Select Earnings and Deductions). The default value (1) indicates inclusion of the income item in the scheduled check payment. Click + to modify the value (2) and separate the income item into a distinct check payment.

4Misc InformationDisplays rules about how and where the system uses the item and implications for user interaction.


Food Sales

The food sales income type is used for tracking and additional reporting needs and has no impact on employee compensation. It displays tips earned as a percentage of the employee's sales. You can enter it on step 4 of the payroll batch (Time Entry). It is not added to the gross pay for tax calculations and is not included in net pay.


Tip to Min

The tip to min income type is a way to ensure that employees who do not earn a minimum required amount in all types of income receive the difference between their actual earnings and the required minimum amount (for example, a state minimum wage requirement). This income type ensures compliance with US Department of Labor rules. It is calculated by the system and available for review before payroll approval.