Payroll Requirements

Although payroll processing seems simple on the surface, it is actually a challenging task. There are wages and taxes to consider to ensure they are accurately paid. For the employer to accomplish this, she or her payroll staff must understand what payroll requires.

Paying Wages

The law requires employers to pay their employees wages for their services rendered. These wages usually come in the form of regular and overtime pay.

Paying Taxes

The government requires employers and employees to pay payroll taxes. The employee must pay federal, state and FICA (Medicare and Social Security) taxes; the employer must pay FICA, and federal and state unemployment taxes.

Deducting Benefits

If the employer offers benefits such as health and pension plans, they are typically deducted from the employee's paycheck each pay date. These benefits are voluntary as a rule.

Payroll Staff

The payroll staff should be trustworthy, knowledgeable and efficient. If not, employees suffer from inaccurate and untimely paychecks. The payroll staff's skills should include a basic understanding of accounting and payroll tax laws.

Payroll Accounting

Establishing an accurate payroll accounting system helps to ensure that all wages are properly coded into the General Ledger. This streamlines the accounting aspect of the business with the payroll aspect. Payroll software such as Quickbooks and Peachtree Accounting are well-known programs that are useful for both the payroll and accounting aspects of the business.

References

• Payroll Withholding Requirements