OVERVIEW: This article addresses how to setup cost centers to point system tax calculations to the appropriate employee's work location. This is essential whenever a client has employees that work in different tax jurisdictions for (state or local). Without such settings, the system will calculate applicable state and local taxes based off the company address.
STEP 1: Gather from the client all work location addresses. If they have remote employees, there is one setting to look at the employee's home address as their work location, so assuming employee addresses are in the system, you wouldn't need them.
STEP 2: Create a New Cost Center for Work Location (Tax Jurisdiction)
Company Settings > Global Setup > Company Setup > Company Config Tab
STEP 3: Go to the Cost Center Settings and enable the ADDRESS under the Levels section for the appropriate cost center level (Typically the 1st)
STEP 4: Create the cost center list with each worksite location and address.
NOTE: for remote employees, one cost center can be created to look at the Employee's Home Address for their work address by check the box instead of populating an address.
STEP 5: Assign Default Work Locations to employees respectively (may need to be completed by the client)
Important Notes:
- If clients have certain employees that change work locations and subsequently also need to change tax jurisdictions, then those cost centers must be allocated on the time sheet OR a labor distribution profile must be used so that the employee is taxed accordingly in multiple state/local tax jurisdictions.
- If employees change locations, but should not change tax jurisdictions, best practice would be to use a separate cost center for tracking those location movements without affecting their primary tax jurisdiction
- If employees live/work across state lines, reciprocity settings are set on the employee level with their tax settings not on the cost center
Disclaimer: This article assumes that taxes have already been setup on the company and employee level.