Definition of Payroll
The varied financial records that calculate the sum of hourly wages, salaries and bonuses paid out to employees of a company make up the payroll of the business. The payroll also contains the state and federal taxes paid out on all types of employee compensation.
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Wages and Salary
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Your employees who work for both an hourly wage and a salary are part of the payroll. Salaried employees receive a set amount of pay per pay period, which reduces paperwork. Employees who earn hourly wages, however, must have a log kept of the hours worked per week. This sum of hours multiplied by the hourly wage earned will be a part of the payroll. Any overtime hours worked by either type of employee are also included.
Bonuses
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When bonuses are paid out to employees, these should also be included as part of the payroll because state and federal taxes must be paid on bonus earnings in most instances. It is important for employees to insist upon payroll deductions when receiving a bonus as all employers may not withhold deductions automatically.
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Payroll Basics
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While several different elements go into the payroll, many of the more serious aspects of payroll come in the distribution of payroll to employees. Employees expect payroll to be distributed on a regular, timely schedule and to be accurate. This accuracy should not only extend to the money paid out to the employee but to the money held out for taxes as well.
Payroll Taxes
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State and federal taxes must be withheld from employee wages. The amount of taxes withheld is based on information provided to the employer when new hires fill out a W-4 form. These taxes pay into Social Security, Medicare and unemployment benefits on both the federal and state level, individual income tax trusts for the state and federal governments and disability benefits. In addition to the contributions held directly out of an employee paycheck as part of payroll, the payroll also includes the contributions a company must make on behalf of their workers.
The Payroll Process
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Payroll can be handled by a company accountant or accounting department on paper. It can also be processed through the use of computer programs administrated by a worker or through the use of a payroll software program that automates the entire process. These software programs calculate employee withholdings and company contributions to government trusts. They can also print paychecks and send quarterly trust payments to the state and federal government.
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