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Explain Taxes

Explain Taxes. It is important to keep good payroll records. It’s the Law… Payroll is a large expense for most companies First place they cut because of it’s large expense . Payroll Terms.

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Explain Taxes

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  1. Explain Taxes It is important to keep good payroll records. It’s the Law… Payrollis a large expense for mostcompanies First place theycutbecause of it’s large expense.

  2. PayrollTerms • Payroll -is a list of employees and the payments due to each one for a specific pay period • Pay Period is the amount of time over which an employee is paid; such as weekly, biweekly (every two weeks), semimonthly (twice a month), or monthly pay periods.

  3. Payrollterms • Payroll Clerk- is a person who is responsible for preparing the payroll. • Makes sure employees are paid on time. • Makes sure each employee is paid the correct amount. • Completes payroll records. • Submits payroll reports. • Pays payroll taxes

  4. THE PAYROLL SYSTEM • Calculates earnings • Calculates deductions • Prepares payroll checks • Reports payroll information to government • Records earnings and deductions in payroll and accounting records.

  5. PayrollTerms • Gross Earnings -is the total amount of money an employee earns in a pay period. The calculation of gross earnings depends on the basis an employee is paid. An employee’s pay can be based on: • Salary • Hourly wage • Commission • Salary plus commission or bonus • Overtime pay

  6. PayrollTerms • Salary is a fixed amount of money paid to an employee for each pay period.

  7. Payroll • Wage -is an amount of money paid to an employee at a specified rate per hour worked. The number of hours worked multiplied by the hourly wage equals the gross earnings for the pay period

  8. Payroll • Electronic Badge Reader • is an identification badge with a magnetic strip that contains employee information used to record starting and ending work hours.

  9. Payroll • Commission is an amount paid to an employee based on a percentage of the employee’s sales. • Overtime rate, set by the Fair Labor Standards Act of 1938, is 21 1/2 (1.5) times the employee’s regular hourly pay rate

  10. Payroll • Deduction is an amount that is subtracted from gross earnings. • Deductions Required by Law: • Federal Income Tax • Social Security Tax • State and Local Taxes • Voluntary Deductions

  11. Payroll • Federal Income Tax. • Most people pay the federal government a tax based on their annual income. Employers are required to withhold a certain amount of money from each payroll check.

  12. Form W-4 • is an employee's withholding allowance certificate that shows the number of allowances claimed for federal and state income taxes. The amount withheld for federal income taxes depends on three factors: • The employee's marital status. • The number of allowances claimed by the employee. • The employee's gross earnings.

  13. Payroll • Allowance • reduces the amount of income tax to be withheld. The greater the number of allowances claimed by a taxpayer, the lower the amount of income tax withheld from earnings.

  14. Payroll • Tax Table • shows the amount of taxes to be withheld from employees each pay period based on their filing status, such as single, married, etc

  15. Payroll • Social Security Tax. • Employers also collect social security taxes for the federal government. The Federal Insurance Contributions Act (FICA) established the present social security system in 1935. The FICA taxes finance programs that provide income to certain individuals:

  16. Payroll • The old age and disability insurance • programs provide income to retired and disabled persons and their dependent children. • The survivor's benefits program provides income to the spouse and dependent children of a deceased worker. The Medicare program provides health insurance benefits for the elderly

  17. Payroll • State and Local Income Taxes. Most states and cities tax the earnings of the people who live or work within their boundaries

  18. Voluntary Deductions. • Most employers agree to deduct other amounts from their employees' payroll check to accommodate the wishes of the employees. The employee must initiate the request. Common voluntary deductions include:

  19. Voluntary Deductions. • Union dues • Health insurance payments • Life insurance payments • Pension and other retirement contributions (example: 401 (k) plans, which are a personal employee retirement plan and all earned income, are exempted from taxes. • Credit union deposits and payments • U. S. Savings Bonds • Charitable contributions

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