Payroll

Payroll

A list of the employees and the payments due to each employee for a specific pay period. Weekly, biweekly, semimonthly, or monthly.

Pay period

The amount of time over which an employee is paid

Payroll clerk

Person who prepares the payroll. Makes sure employees are paid on time, paid the correct amount, completes payroll records, submits payroll records, and pays payroll taxes

Gross earnings

Total amount of money an employee earns in a pay period

Salary

A fixed amount of money paid to an employee for each pay period. The employee receives the same amount regardless of the number of hours worked

Commission

An amount paid to an employee based on a percentage of the employee’s sales

Salary + Commission or Bonus

A base salary plus an additional commission or bonus on the amount of their sales

Piece rate

Paid a specific amount for “EACH ITEM”

Overtime pay

Earnings above regular pay. If paid hourly, the overtime pay is any time over 40 hours and paid at 1.5 times the regular rate. The overtime rate is set by the Fair Labor Standards Act of 1938

Hourly wage

An amount paid to an employee at a specific rate per hour worked

W4: S, no dependent

Single.

• If you claim one you get less taken out, but then you might have to pay more on April 15

• If you claim 0 you get a little more taken out, but enough will be taken out your check so that you don’t have to pay April 15

W4: M, 2 children, 1 parent working

Married.

• 4: You can claim up to 4 because you have your wife, 2 children, and yourself

• 0/1: May be enough that you don’t have to pay and will get a refund

• If both parents work, they can split it up

Reasons for employees to be exempt from W4

• They did not have a tax liability the previous year

• They expect no tax liability this year

• Income of $700 or less, including non-wage income such as a savings account interest

• Cannot be claimed as a dependent on someone else’s

FICA (Federal Insurance Contributions Act of 1935)

Social security (OASDI) and Medicare (old)

Max gross pay subject to social security tax

$176,000

Voluntary deductions

401k plan: voluntary retirement savings payroll deductions. Employee does not pay income tax on earnings contributed to a 401k until the money is drawn from the plan