A Quick Guide To Payroll Terminology

Whenever I travel to a new country where I don’t speak the language, I try to learn a few words and phrases to help me get by. I can’t overstate how useful “Help,” “I’m lost,” and “Where’s the bathroom” can be when traveling. We may receive compensation from partners and advertisers whose products appear here. Compensation may impact where products are placed on our site, but editorial opinions, scores, and reviews are independent from, and never influenced by, any advertiser or partner. News Learn how the latest news and information from around the world can impact you and your business. Comparisons Trying to decide between two popular software options? Beginner’s Guides Our comprehensive guides serve as an introduction to basic concepts that you can incorporate into your larger business strategy.

These payments need to be shared with the employer and recorded on the employer’s tax returns, including employee W-2s. Social Security – Social Security is both an employee withholding tax and an employer payroll tax.

Gross Pay Crossword

Courts sometimes issue garnishment orders for debts like student loans, small claims judgments, child support, or other amounts the employee owes. As part of a compensation package, many employers offer paid vacation, sick, and personal time. Often employers choose to allow the employee to earn a certain amount of time per pay period. Before a company can give a payroll card to a worker, the business must first contract with a payroll card program manager.

Overtime is calculated differently for hourly and salaried employees. Most salaried employees are exempt from overtime, but your business may be required to pay overtime to some lower-paid exempt employees. Third party sick pay– Third party sick pay is compensation paid by a third party to an employee because of non-job-related illness, injury, or condition . The payment is considered fully taxable for the first six months, then becomes exempt from FICA and FUTA if the payments continue into the seventh month and beyond.

Pay

Businesses may use paper timesheets, time clock software, or an ESS portal to track how much an employee worked. Arrears payroll points to a delayed payroll process where the business only pays employees once the pay period has ended, not before. Fringe benefits, also called imputed income, are the perks that businesses offer aside from regular wages.

In summary, it’s like a Social Security number for businesses and required for any business processing payroll. Employers pay a reasonable wage and may offer benefits, especially if employees work at least 40 hours weekly; you must also pay and withhold taxes on employee earnings. In exchange, these employees must abide by company rules such as when and how to work. For salaried employees, gross pay is stated as an annual amount. To determine gross pay for a pay period, the annual salary is divided by the number of pay periods in the year.

In Some Years, There Are 27 Periods For Bi

An acronym for Automated Clearing House, ACH refers to an electronic network dedicated to credit and debit transfers. In payroll processing, an accrual occurs any time there is a difference between the pay cycle allocation and the actual expenses paid. GovDocs is one of the leading providers of labor law compliance products and services in North America, serving 263,000 employment locations in the U.S. and Canada.

A pension is a fixed sum paid regularly to a person, typically, given following retirement from service. Human Resource Information Systems are a great way to distribute bonus checks to your remote employees. Payment made to an employee to cover time away from work due to falling ill. Compensation that an employer provides to terminated employees, typically those who are discharged through no fault of their own (e.g., layoff). An employee’s take-home pay, after mandatory and voluntary deductions.

Partial Pay

Payroll might not be a foreign country, but new small business owners should nonetheless familiarize themselves with these standard payroll vocabulary payroll terms and abbreviations. Looking for the best tips, tricks, and guides to help you accelerate your business?

For example, Social Security tax, FUTA tax, and SUTA tax each have their own annual taxable wage base. Refers to when an employee gets a predetermined amount of compensation each payday on a weekly basis, or less frequently (e.g., biweekly or semimonthly). Under the Fair Labor Standard Act’s salary basis rule, exempt employees generally must receive no less than $684 weekly.

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Taxable wages are the earnings from which an employer must withhold taxes. The definition of taxable wages depends on the tax you’re talking about.

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Wage & Hour Laws By State

Refers to the rate of pay contractors and vendors must offer their employees when doing business with a government agency. This must be reported as additional income on an employee’s W-2.

• Charlette Beasley is a writer and editor at Fit Small Business focusing on payroll.
• The contributions are not subject to federal income taxes until they are withdrawn.
• Each payroll tax comes with its own set of rules, exceptions, and limitations.
• Taxable – The actual amount of wages or compensation that is subject to a tax type and used to calculate the tax due.
• Payroll Accountant/Payroll Analyst – Maintains payroll-related accounts and is responsible for the reconciliation and accuracy of one or more accounts within a complex accounting system.

Word Search that introduces the terminology used when discussing Banking and Payroll with students in a Business or Entrepreneurship Course. The district has roughly 49 officers and other police employees and spends at least $6 million per year on salaries alone. In the UK, warrants are issued as payment by National Savings and Investments when a premium bond is chosen. Money-making activities that people don’t report to the government, including both illegal and legal activities. An action taken to lessen tax liability and maximize after-tax income. A tax that takes the same percentage of income from all income groups.

In the U.S., warrants are issued by government entities such as the military and state and county governments for payroll to individuals and for accounts payable to vendors. Compensation received by an employee for services performed. A salary is a fixed sum paid for a specific period of time worked, such as weekly or monthly. A program sponsored by the IRS in partnership with participating states that allows taxpayers to file federal and state income tax returns electronically at the same time. Withholding or tax withholdings refers to the amount removed as state and federal income from an employee’s gross pay. Supplemental Wages – Compensation other than regular pay received by an employee.

Take-home pay–The employee’s wages that remain after all normal deductions and taxes are taken out This is also known as net pay. Base pay rate– The rate that has been agreed upon to be the starting point for employee earnings. This can be an hourly rate, a daily rate, a piece rate, or salary per pay. However, vocabulary referring to the figurative “pay cheque” persists in some languages, but this commonly refers to a payslip or stub rather than an actual cheque. Some company payrolls have eliminated both the paper cheque and stub, in which case an electronic image of the stub is available on a website. Most of the provinces and territories in Canada allow employers to issue electronic payslips if the employees have confidential access to it and are able to print it. If your spouse died in 2010, you can use married filing jointly as your filing status for 2010 if you otherwise qualify to use that status.

In this article, we cover minimum wage for hourly and tipped employees, minimum work age and other unique state laws. The term “pay period” refers to the frequency with which an employer chooses to pay employees and contractors. The Electronic Federal Tax Payment System was created in hopes of automating the otherwise clumsy process of handling physically mailed tax payments.

A tax levied against the amount of wages and salaries paid workers. In some states, employers must pay out unused vacation time to terminated employees. In large food and beverage establishments, if all reported tips are less than 8% of the total gross sales, the employer must allocate the difference. The employer assigns/allocates an additional amount in tips on the W-2 of employees whose reported tips are less than 8% of the total gross sales. The portion of an employee’s wages that is subject to Social Security tax. The Social Security and Medicare taxes a self-employed person is legally required to pay. Work paid for based on the number of products completed or units produced.

Unlike the Form W-2, Form 1099NEC does not require a company to withhold taxes or other deductions. These employees are paid a salary and must perform executive, administrative or professional duties.

A tax that cannot be shifted to others, such as the federal income tax. Amount that taxpayers can claim for a “qualifying child” or “qualifying relative”. The exemption amount is a set amount that changes from year to year. One exemption is allowed for each qualifying child or qualifying relative claimed as a dependent. Commissions are paid based on a percentage of sales made or a fixed amount per sale. A bonus is given in addition to an employee’s usual compensation. As if that wasn’t enough, businesses would have been hit with an 11.5% state payroll tax.