               ANTHISTLE SYSTEMS & PROGRAMMING LTD.
                       563 Patricia Drive,
                Oakville, Ontario, Canada L6K 1M4

                     Telephone 905-845-7959

                                                  7th. January 1994


PRINTING 1099-MISC FORMS
========================

The capability of printing the 1099-MISC form was first added to
PAYROLL USA 1/94 for the 1993 tax year.  Usually, persons on the
PAYROLL USA files are employees and therefore need a form W-2
instead of a 1099-MISC, the 1099-MISC being intended ONLY for self
employed persons.   However, it seems that some companies are using
PAYROLL USA to keep track of payments made to self employed persons
doing contract or sub contract work.  To make this workable, the
rules we have decided to adopt are as follows:

If you create a W-2 file from PAYROLL USA all persons, employees and
self employed if they are mixed, will be on that file.  This does
not preclude you from also creating a 1099-MISC file but be aware
that there may be some duplication and, as only one form is needed
per person, those on the 1099-MISC file should be manually marked
void (X the VOID box) on the W-2 file (editing before printing) to
stop the W-2 from printing or being included in the W-3 totals.
If they are not mixed and everybody on the file is to have a
1099-MISC then you do not need to print the W-2's at all.

If you create a 1099-MISC file from PAYROLL USA then ONLY those
people who have no Advance EIC and no withholding for Social
Security, Medicare, and Local Income Tax will be included as there
is no way of reporting these items on the 1099-MISC and they should
not have any amounts in them anyway if the person really is self
employed. This does not preclude you from also creating a W-2 file,
but you do not need both for the same person so see the notes in the
above paragraph regarding duplication.   Of the people included,
earnings will be shown in Box 7 (Nonemployee compensation), Federal
Income Tax (if any) will be shown in Box 4, and State Income Tax (if
any) will be in Box 11.  Generally, the IRS will consider Box 4 to
be backup withholding (example, 31% rate if recipient does not
furnish taxpayer identification number), presumably the State will
make the same assumption for Box 11.  


KEEPING SELF EMPLOYED FIGURES SEPARATE FROM EMPLOYEES
=====================================================

So much for the year end forms, however, there is another aspect to 
bear in mind.  The total of the W-2's is supposed to balance to the 
sum of the quarterly 941's and to the associated IRS remittances 
made during the year. People who are self employed and who are 
intended to get a 1099-MISC should not therefore be included in the 
941 or it will never balance to the W-2's.  The best way of handling 
this is to put all the self employed persons on a separate employee 
file to keep them totally separate from true employees, and for all 
those self employed persons their individual tax set up screens can 
be made exempt from all taxes (that should do the trick, but if you 
wish to be doubly sure set Computer to Calc Tax to False on their 
hours entry screen each pay period).


MULTIPLE EMPLOYEE FILES - NO EXISTING MIXTURE ON ONE FILE
=========================================================

To create a separate employee file (if you are not already using 
multiple files) enter the following at the DOS prompt 

C:       { or whichever drive PAYROLL USA is installed on }
CD \PAYPGMS
REN PAYUSA.CNF STAFF.CNF
PAYUSA

You only need to do this once, to initialize the extra logic.  When 
PAYROLL USA starts you will see an extra screen that asks which file 
you wish to process (only STAFF will be listed at this stage) or 0 
to start a new file.  Select 0 and respond to the prompts which 
follow.  You can use any name instead of STAFF in the above REN 
command, whatever is meaningful to you (8 characters or less). 


MULTIPLE EMPLOYEE FILES - CURRENTLY MIXED ON ONE FILE
=====================================================

If you already have self employed mixed in with employees and you 
wish to save re-entering them in the new file then, if the most 
recent pay cycle has been made permanent, you can cheat by adding 
the following commands after REN PAYUSA.CNF STAFF.CNF and before 
PAYUSA, as follows, 

C:       { or whichever drive PAYROLL USA is installed on }
CD \PAYPGMS
REN PAYUSA.CNF STAFF.CNF
MD \CONTRACT\PAYIN
COPY \PAYIN \CONTRACT\PAYIN    { assumes employees on C:\PAYIN }
PAYUSA

this will put the same employee information in both places so you 
need to be certain that you also do the following

1. When you reply 0 to create a new file you will be asked for a 
name, be sure to specify the new file name as CONTRACT  

2. All true employees should be terminated on the CONTRACT file.

3. All contract people should be terminated on the STAFF file.

4. When you do backups after each pay cycle you must use a separate 
diskette for the STAFF people than the one used for the CONTRACT 
people (if they will fit, you can still do multiple pay cycle 
backups on one diskette, but it must be the right one - you will be 
told if it is not). 

Again, this set up only needs doing once, and it is best done as 
early in the new tax year as possible.


                         Christopher Anthistle
                           7th. January 1994
