Having a complete list of your employees can help you avoid making any mistakes when it comes to processing the payroll. Getting paid for the hard work they have done is something that they highly anticipate as it means that all of the efforts they did for their work has finally paid off. This is why you must do your part in making sure that you are able to accurately compute the payroll of the employees in the company. A lot goes on when it comes to processing payroll. Constant updates and monitoring of employees is definitely a must to ensure that you end up with a close to error-free computations. This way, misunderstandings regarding pay can be avoided.
In this article, we would like to give you some useful information about payroll. Who knows? Maybe you can apply your new learnings to your current payroll process and make your process way easier. Plus, we will even be including a number of different kinds of printable payroll templates that you can definitely use as a reference to update your payroll template and employee payslip templates.
Payroll Schedule Template
Payroll Worksheet Template
Sample Payroll Timesheet
Daily Payroll Timesheet Template
Payroll Budget Template
Restaurant Payroll Budget Template
Payroll Weekly Timesheet Template
Payroll Timesheet Calculator Template
Sample Payroll Timesheet Samples
Sample Payroll Timesheet Template
Blank Employee Payroll Timesheet Template
Student Payroll Timesheet
Casual Employee Monthly Spreadsheet Template
Employee Payroll Templates
Employee Payroll Report Sample
Payroll Time Spreadsheet for Employees
Payroll Employee Cards Spreadsheet
Employee Full Payroll Sample
Online Employee Payroll Sample
Employee Excel Payroll Template
Payroll Register Samples
Blank Payroll Register Template
Payroll Check Register Sample
Sample Company Payroll Register
Manufacturing Company Payroll Register
Payroll Check Register Sample in PDF
Payroll Register Template in Excel
Group Underwriting Roster Payroll Register Template
Employee Payroll Register Template
Breaking Down Common Terms Related to Payroll
To make everything clearer for you, let us break down a few terms that you will commonly hear that is related to payroll.
- Payroll. First and foremost, let us define what payroll is. Payroll refers to the complete sum of what a company must pay its employees for a specific period of time. It can also refer to the complete list of the employees that are currently employed by the company and the corresponding pay or salary that the employee gets for a specific pay period. It can differ from one pay period to another due to bonuses, allowances, deductibles, and overtime pay. A ton of times, the accounting department of the company are the ones responsible for processing payroll. For small businesses, it is usually the owner or the manager who manages the payroll. Some businesses often outsource payroll as there are some benefits of outsourcing payroll such as being able to focus more on the company’s operations.
- Payroll Tax. A payroll tax is a specific tax that an employer withholds and pays on behalf of the employee. The amount of payroll tax that is deducted is based on the total salary that an employee gets for the specific pay period. Taxes are used to fund health care, unemployment benefits, Social Security, and workers compensation. It is also used to fund the maintenance of common public infrastructures such as roads and parks. You can take a look at Payroll Tax Basics for Small Business to have a better idea of how basic taxes are computed.
- Payroll Deduction Plan. This refers to an employee contribution plan wherein an employer will deduct a specific amount from the employee’s pay which will be used to fund the employee’s insurance, health care plans, or other accounts for investment.
- Wage Expense. Wage expense refers to the hourly wage that employers give to employees. It is considered as an expense on the employer’s part.
How Does a Payroll System Work?
What is a payroll system? A payroll system is everything that involves paying employees and filing employment taxes. It also involves monitoring of the hours rendered by an employee, calculation of wages, computation of taxes and deductions, printing of payslips, and printing of paychecks or depositing of cash to bank accounts.
A payroll system is constantly updated when a new employee is hired by the company or when an employee leaves the company. When an employee is hired in a company, the company is required to report the new employee to the state alongside the tax forms such as a W-4 tax form. A W-4 tax form will help the employer determine how much allowance that an employee is entitled and the amount of deductible that is taken from the employee’s pay.
Employee information should also be taken into account. This includes the employee’s address and the employee’s bank information or account number. Since this information is pretty sensitive, an employer or the people responsible for processing payroll should make sure that this information is secured.
One of the most common responsibilities of a payroll system is being able to properly compute taxes. The most common income taxes withheld by an employer are the following:
- Federal income tax
- State income tax
- Local income tax
- Social Security tax
- Medicare tax
Since an employer withholds the taxes, he/she is now responsible for these funds. Once deadlines for taxes come up, the employer should pay the taxes accordingly.
You can check out Employer Responsibilities for Payroll Taxes to give you a better idea of what employment taxes that are withheld by employees.
Common Deductibles from Payroll
There are a ton of deductibles that go on in a payroll. Some of these are the following:
- Health insurance
- Life insurance
- Premium insurance
- Retirement funds or 401k
- Worker’s compensation
- Union dues
- Sick pay
- Vacation days
- Legal wages from outstanding debts
- Child support payments (if applicable)
What Happens at the End of the Year?
At the end of each year, an employer will use the payroll system to take note of the wages and get the total amount of taxes withheld from all of the employees. An employer will then fill out a W-2 form or a 1099 form. Three copies are to be secured by the employer for each form: one for the employee, one for the Internal Revenue Service (IRS), and one for the Social Security Administration (SSA).
Are There States with No Income Taxes?
There are nine (9) states that do not have income taxes. Seven (7) of these states do not have taxes for wages and dividends while the other two do not have taxes for wages but do have taxes for dividends.
States with no income taxes:
- South Dakota
States with no income taxes on wages but have taxes for dividends:
- New Hampshire
You can find out more about how you can process payroll by reading How to Do Payroll Taxes and Process Payroll Yourself.
Payroll Payslip Samples
Blank Payslip Template
Employee Payslip Template
Employee Payslip Payroll Template
Payroll Payslip Template
Basic Payroll Templates
Payroll Template for New Employee
Payroll Summary Template
Printable Teacher Payroll Sample
Sample Payroll Record for Farm Labor
Sample Payroll for Voluntary Deduction
HR Management Payroll Sample
Internship Payroll Spreadsheet
Printable Payroll Spreadsheet
School Payroll Spreadsheet
Accounting Payroll Register Sample
Accounting Payroll Register Template
Sample Accounting Payroll Register Template
Daily Payroll Sample Template
Daily Employee Payroll Template
Weekly Payroll Templates
Weekly Employee Payroll Template
Payroll Weekly Spreadsheet
Biweekly Payroll Templates
Biweekly Employee Payroll Template
Biweekly Payroll Calendar
Monthly Payroll Templates
Monthly Employee Payroll Sample
Monthly Employee Payroll Template
Payroll Hours Templates
Employee Payroll Hours Spreadsheet
Payroll Hours Spreadsheet Calculator
Payroll Hours Calculator
Payroll Hours Calculator in Excel
What Can You Find in a Payroll?
A payroll needs to have all the vital details that are needed to ensure that you will be able to compute the necessary calculations in an accurate manner. So what can you find on a payroll? You can find
- employee information,
- hours worked,
- salaries and wages,
- deductions, and
- net and gross pay.
We will discuss each one more in detail below.
Employee information is pretty basic. It refers to the following:
- Name of the employee
- Complete address
- Social Security number
This information is usually collected upon the hire date of the employee via a W-4 tax form. A W-4 tax form will help an employer determine how much allowance to give and how much taxes to deduct from the pay of the employee. The information collected from a W-4 tax form can help to properly process and evenly distribute payroll among your employees.
Total Hours Worked
The total hours worked by an employee can be collected through an employee timesheet that is provided. Not only will this show you that an employee is properly allocating the required number of hours, it will also help you to monitor absences, leaves, as well as rendered over time. Make sure that you go over your company’s policies regarding overtime pay, paid leaves, and absences to ensure accuracy in computation.
Monitoring the number of hours worked by an employee is highly important for employees who are paid on an hourly wage basis.
Salaries and Wages
What is the difference between a salary and a wage?
Salary refers to a fixed annual pay rate of an employee that is divided into the number of pay periods in a year. Wage, on the other hand, refers to the pay of an employee based on the number of hours worked by the employee. For wages, a specific rate is assigned to an hour’s worth of work. To compute for the total wage pay of an employee, you have to multiply the number of hours worked by the employee by the hourly rate.
What else is included in salaries and wages?
- Overtime pay. Non-exempt employees are entitled to be paid overtime pay should they work beyond the required number of hours for a specific period of time. Usually, overtime pay is one-and-a-half times (1.5x) than the normal hourly pay rate. However, your company may pay more than the usual overtime pay. Check the company policies that you have regarding pay as well as the state requirements that are present in your area.
- Fringe benefits. Fringe benefits supplement the pay of the employee. These help to subsidize meals, subsidize company cars, health insurance, retirement plans, and other employee discounts. All of the extra benefits and bonuses that an employee gets from the company is reflected in the payroll.
- Extra bonuses. This can pertain to tips or service charge that is given to employees as an extra. Commissions and bonus pay also fall under this category. Some extra bonuses given to employees, such as tips, are also subject to payroll tax.
The deductibles refer to the amount of money that is subtracted from the employee’s pay. The most common deductibles are:
- Payroll tax. Payroll taxes are withheld from the employee’s pay every pay period. These are paid every quarter during the due date of depositing taxes.
- Garnishments. This is a deductible from an employee’s pay after all taxes are deducted from the pay. Should an employee have an overdue debt, to help pay it off, it is taken away from the garnishments. Unpaid taxes, loans, and other overdue fees are also taken away from the garnishments. These are court-mandated deductions.
Net Pay and Gross Pay
Gross pay refers to the employee’s total pay sans deductions. This is what you will typically see in an IRS form. Net pay, on the other hand, is the employee’s take-home pay after all the deductions have been made. In an employee payslip, both net pay and gross pay are reflected.
6 Easy Steps to Process Payroll
If you feel like you are an expert or have a good idea about processing taxes, the DIY approach would be best for you. Here are easy steps you can follow so you can start processing payroll by yourself.
- Step 1: Compile completely filled out W-4 forms. This is the form that employees fill out upon getting hired. Make sure that you keep copies of these forms for reference. It can also help you determine the amount of taxes, deductibles, and allowances that are due for each employee.
- Step 2: Employee Identification Number. If you have been with the industry for quite some time now, you should already have your EIN or Employer Identification Number. If you are new, then you have to make sure that you enroll or register to make sure you have one. This is a unique number assigned to your business that is used by the IRS to identify a business.
- Step 3: Choose an appropriate payroll schedule. Make sure that in choosing your payroll schedule that you have enough time to process taxes and pay them on their due dates. It is up to you whether you want to have one or two payroll dates in a month.
- Step 4: Calculate the taxes. You can check out a payroll tax table to help you determine the amount of tax that you need to withhold from an employee’s payroll. Make sure that you also keep track of your own share of payroll tax. Need more tips regarding taxes? Check out Payroll Tips from a Tax Professional.
- Step 5: Pay taxes. Make sure that you pay taxes when they are due.
- Step 6: File tax forms and W-2 forms. Send the employer federal tax return and other local returns applicable to your business. Make sure that you also prepare yourself when it comes to filing annual forms such as your W-2 forms.
Why Is a Payroll System Significant?
Payroll plays an important role in organizations both big and small. Not only do payroll systems take care of the employees’ salaries but they also make sure that the company’s integrity is protected and that companies continue to follow laws regarding fair employee compensation.
Aside from processing employee pay, a payroll system actually has a huge effect on the overall standing of the company as it affects different aspects of the company. Here’s what we mean:
- You can encourage employees and make them feel important. This is because getting that payslip actually makes the employee feel secured especially when these are given on time. Getting a steady pay gives the employee assurance that he/she can also be stable. Consistency when it comes to giving payslips and pay is what you need to ensure to continuously boost the morale of your employee. Feel like you will be late with processing your employees’ payroll? Read up on How to Pay Employees When You Can’t Make Payroll to ensure that your employees still end up getting paid despite being late on the payroll.
- Payroll systems can make the employees feel valuable. This is done through the compensation package that you give your employee.This is because the compensation of an employee does not just focus on the basic wage or the basic salary of the employee. It also covers benefits, allowances, bonuses, paid timeouts, paid leaves, insurance, and health insurance provided by the company. You will also aid in making your employees feel valuable through employee performance evaluation and give them feedback regarding how he/she has done for a specific period of time. You can also give the employee performance appraisal bonuses or a raise based on the result of the performance evaluation. Doing so will, again, boost the morale of the employee and encourage him/her to continue to strive better which can, in turn, improve the output of the company. This now becomes a win-win situation for the parties involved.
- Continuously sustain the reputation of the company. Payroll activities are supposed to adhere to the legal provisions provided by the state and local government with regards to computing taxes and accurately computing the pay of the employee. Paying taxes before or on the deadline can help to uphold the reputation that the company has, which is what you really want, right? This adds more value to your company making it more attractive to investors and to potential employees as well.
- Focus and allocating resources properly. Doing payroll is definitely a time-consuming task with all the calculations and paperwork that comes with it. Not only that, but you have to do it once or twice a month, sometimes even on a weekly basis. But no matter how time-consuming this task may be, accuracy is still needed to be imposed to ensure that you do not find yourself having to explain to the employees why there are miscalculations on their payslip. Making use of a reliable payroll system is advised, or if you are on a budget, making use of a reliable employee payroll sample with formulas already embedded in cells can help you out as well. This can help you save money and time which can help you focus more on other areas of your business.
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