Payroll Accounting, Taxes, and Reports. 2 4. Payroll Register.
Payroll Accounting Making Accounting Relevant Businesses issue payroll checks to their employees to...
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Payroll Accounting Making Accounting Relevant Businesses issue payroll checks to their employees to compensate them for work performed. If you have a part-time job, what items appear on your pay stub? Do you verify that your gross earnings were properly calculated?
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Transcript of Payroll Accounting Making Accounting Relevant Businesses issue payroll checks to their employees to...
Payroll AccountingPayroll Accounting
Making Accounting Relevant
Businesses issue payroll checks to
their employees to compensate them
for work performed.
Making Accounting Relevant
Businesses issue payroll checks to
their employees to compensate them
for work performed.
If you have a part-time job, what items appear on your pay stub? Do you verify that your gross earnings were properly calculated?
Section 1Calculating Gross Earnings
Section 1Calculating Gross EarningsWhat You’ll Learn
The importance of accurate
payroll records.
How to calculate gross
earnings.
What You’ll Learn
The importance of accurate
payroll records.
How to calculate gross
earnings.
Why It’s ImportantFor many businesses payroll is the
largest expense. It is essential that the payroll system accurately determine the gross pay for each employee for every pay period.
Why It’s ImportantFor many businesses payroll is the
largest expense. It is essential that the payroll system accurately determine the gross pay for each employee for every pay period.
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
Key Terms payroll pay period payroll clerk gross earnings wage salary
Key Terms payroll pay period payroll clerk gross earnings wage salary
time card electronic badge
readers commission overtime rate
time card electronic badge
readers commission overtime rate
The Importance of Payroll RecordsThe Importance of Payroll Records
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
The payroll is a list of the
employees and the payments due
to each employee for a specific pay
period.
A pay period is the amount of time
over which an employee is paid.
The payroll is a list of the
employees and the payments due
to each employee for a specific pay
period.
A pay period is the amount of time
over which an employee is paid.
The Importance of Payroll Records (cont'd.)
The Importance of Payroll Records (cont'd.)
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
Computing Gross PayComputing Gross Pay
The total amount of money an
employee earns in a pay period is
gross earnings, or gross pay. An
employee’s pay can be based on:
The total amount of money an
employee earns in a pay period is
gross earnings, or gross pay. An
employee’s pay can be based on: salary salary
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
hourly wage hourly wage
commission commission
salary plus commission or bonus salary plus commission or bonus
overtime pay overtime pay
SalarySalary
A salary is a fixed amount of money
paid to an employee for each pay
period.
An employee who is paid a salary
earns the same amount regardless of
the number of hours worked during
the pay period.
A salary is a fixed amount of money
paid to an employee for each pay
period.
An employee who is paid a salary
earns the same amount regardless of
the number of hours worked during
the pay period.
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
Hourly WageHourly Wage
A wage is an amount of money paid to
an employee at a specified rate per
hour worked.
The number of hours worked
multiplied by the hourly wage equals
the gross earnings for the pay period.
Calculate the example!
A wage is an amount of money paid to
an employee at a specified rate per
hour worked.
The number of hours worked
multiplied by the hourly wage equals
the gross earnings for the pay period.
Calculate the example!
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
CommissionCommission
A commission is an amount paid to
an employee based on a
percentage of the employee’s sales.
Some salespeople earn a base
salary plus a commission or a
bonus on the amount of their sales.
A commission is an amount paid to
an employee based on a
percentage of the employee’s sales.
Some salespeople earn a base
salary plus a commission or a
bonus on the amount of their sales.
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
Overtime PayOvertime Pay
Employers are required to pay
overtime when employees covered by
certain state and federal laws work
more than 40 hours per week.
The overtime rate, set by the Fair
Labor Standards Act of 1938, is 1½
(1.5) times the employee’s regular
hourly pay rate.
Perform Calculations!
Employers are required to pay
overtime when employees covered by
certain state and federal laws work
more than 40 hours per week.
The overtime rate, set by the Fair
Labor Standards Act of 1938, is 1½
(1.5) times the employee’s regular
hourly pay rate.
Perform Calculations!
Section 1 Calculating Gross Earnings (cont'd.)Section 1 Calculating Gross Earnings (cont'd.)
Section 2Payroll Deductions
Section 2Payroll DeductionsWhat You’ll Learn
Why deductions are calculated and
reported.
How to calculate deductions
required by the federal government.
How to determine voluntary
deductions.
What You’ll Learn
Why deductions are calculated and
reported.
How to calculate deductions
required by the federal government.
How to determine voluntary
deductions.
Why It’s Important
To prepare the payroll accurately
and to comply with the law, both
mandatory and voluntary deductions
must be calculated correctly.
Why It’s Important
To prepare the payroll accurately
and to comply with the law, both
mandatory and voluntary deductions
must be calculated correctly.
Section 2 Payroll Deductions (cont'd.)Section 2 Payroll Deductions (cont'd.)
Key Terms
deduction
allowance
401(k) plan
Key Terms
deduction
allowance
401(k) plan
Computing Employee-Paid WithholdingsComputing Employee-Paid Withholdings
An amount that is subtracted from
gross earnings is called a deduction.
Deductions include those required
by law and those an employee
wishes to have withheld from
earnings.
An amount that is subtracted from
gross earnings is called a deduction.
Deductions include those required
by law and those an employee
wishes to have withheld from
earnings.
Section 2 Payroll Deductions (cont'd.)Section 2 Payroll Deductions (cont'd.)
Deductions Required by LawDeductions Required by Law
Federal Income Tax
Social Security Tax
State and Local Income Taxes
Federal Income Tax
Social Security Tax
State and Local Income Taxes
Section 2 Payroll Deductions (cont'd.)Section 2 Payroll Deductions (cont'd.)
Federal Income Tax
The amount withheld for federal
income taxes depends on three factors:
Federal Income Tax
The amount withheld for federal
income taxes depends on three factors:
the employee’s marital status
the number of allowances claimed by
the employee
the employee’s gross earnings
the employee’s marital status
the number of allowances claimed by
the employee
the employee’s gross earnings
Section 2 Payroll Deductions (cont'd.)Section 2 Payroll Deductions (cont'd.)
Social Security TaxThere are two FICA taxes: Social
Security and Medicare. The tax rates are as follows:
Social security tax 6.20%
Medicare tax 1.45%
Total FICA taxes 7.65%
(Deducted from each employee’s earnings until the maximum taxable earnings amount for the year is reached. This amount increases each year.)
Social Security TaxThere are two FICA taxes: Social
Security and Medicare. The tax rates are as follows:
Social security tax 6.20%
Medicare tax 1.45%
Total FICA taxes 7.65%
(Deducted from each employee’s earnings until the maximum taxable earnings amount for the year is reached. This amount increases each year.)
Section 2 Payroll Deductions (cont'd.)Section 2 Payroll Deductions (cont'd.)
State and Local Income TaxesState and Local Income Taxes
Section 2 Payroll Deductions (cont'd.)Section 2 Payroll Deductions (cont'd.)
In some states and cities, there are
local income taxes.
They can be set tax rates based on a
percentage of gross earnings.
In others, the amounts to be
deducted are indicated on tables
similar to the ones used for federal
income tax.
In some states and cities, there are
local income taxes.
They can be set tax rates based on a
percentage of gross earnings.
In others, the amounts to be
deducted are indicated on tables
similar to the ones used for federal
income tax.
Voluntary Deductions
Common voluntary deductions include:
Voluntary Deductions
Common voluntary deductions include:
union dues
health insurance payments
life insurance payments
pension and other retirement contributions
credit union deposits and payments
U.S. savings bonds
charitable contributions
union dues
health insurance payments
life insurance payments
pension and other retirement contributions
credit union deposits and payments
U.S. savings bonds
charitable contributions
Section 2 Payroll Deductions (cont'd.)Section 2 Payroll Deductions (cont'd.)
Section 3Payroll Records
Section 3Payroll RecordsWhat You’ll Learn
The purpose of a payroll register.
How to prepare a payroll register.
How to prepare a payroll check.
The purpose of an employee’s earnings record.
How to prepare an employee’s earnings record.
What You’ll Learn
The purpose of a payroll register.
How to prepare a payroll register.
How to prepare a payroll check.
The purpose of an employee’s earnings record.
How to prepare an employee’s earnings record.
Why It’s Important
To comply with federal and state
laws, payroll records must be kept
accurately.
Why It’s Important
To comply with federal and state
laws, payroll records must be kept
accurately.
Section 3 Payroll Records (cont'd.)Section 3 Payroll Records (cont'd.)
Key Terms payroll register
net pay
direct deposit
employee’s earnings record
accumulated earnings
Key Terms payroll register
net pay
direct deposit
employee’s earnings record
accumulated earnings
Preparing the Payroll Register
The payroll register is a form that summarizes information about employees’ earnings for each pay period.
Preparing the Payroll Register
The payroll register is a form that summarizes information about employees’ earnings for each pay period.
Section 3 Payroll Records (cont'd.)Section 3 Payroll Records (cont'd.)
Preparing Payroll Checks
The payroll register is the source of information for preparing the payroll checks.
Preparing Payroll Checks
The payroll register is the source of information for preparing the payroll checks.
Section 3 Payroll Records (cont'd.)Section 3 Payroll Records (cont'd.)
The Employee’s Earnings Record
• An employer must keep an
employee’s earnings record.
• This record contains all of the
payroll information related to
an employee.
The Employee’s Earnings Record
• An employer must keep an
employee’s earnings record.
• This record contains all of the
payroll information related to
an employee.
Section 3 Payroll Records (cont'd.)Section 3 Payroll Records (cont'd.)
The Employee’s Earnings Record (cont'd.)The Employee’s Earnings Record (cont'd.)
Section 3 Payroll Records (cont'd.)Section 3 Payroll Records (cont'd.)
This amount was carried forward from the previous quarter’s record.
This amount was carried forward from the previous quarter’s record.
This amount will be carried forward
to the next quarter’s record.This amount will be carried forward
to the next quarter’s record.
