2Paying Employees p. 304 Salary – the money paid for employee service Pay period – the period covered by a salary paymentPayroll – The total amount earned by all employees for a pay periodMust be reduced by state and federal taxes and other deductionsPayroll records used to:Record payrollProvide annual records to employees
4Analyzing Time CardsTime cards used as basic source of information to prepare payrollOmni uses a time clock to record daily arrival and departure timesLook at Rick E. Selby’s time cardThree sections: Morning, Afternoon, OvertimeArrival, lunch, left for the day
5Calculating EE Hours Worked Calculate regular hoursDeparture Time Arrival Time = Hours Worked12: :55 =12: :00 = :00*ROUND TO THE NEAREST QUARTER HOURCalculate overtime hoursTotal regular hours, Total overtime hours
6Calculating EE Total Earnings Total Earnings – total pay due for a pay period before deductionsEnter regular rateCalculate the regular earningsRegular Hours x Regular Rate = Regular Earningsx $ = $1,056.00Enter overtime rate (1.5 times regular rate)Regular Rate x = Overtime Rate$ x = $18.00Calculate overtimeAdd the amount column to calculate total earnings
9Payroll Taxes Payroll Taxes – taxes based on the payroll of a business Based on employee total earningsPenalty for failure to pay correct taxes when dueLIABILITY for employer until payment is made to the governmentEmployee Income TaxBusiness must withhold federal income taxForwarded periodically to the federal governmentState and city income tax can also be withheld
10How many of you have a job? Form W-4Determines the amount of tax to withhold
11EE’s Withholding Allowance Withholding Allowance – a deduction from total earnings for each person legally supported by a taxpayer, including the employeeMarried employee has less withheld than singleThe more allowances the less tax withheldEXEMPT – low-income and part-time employeesFill out a federal W-4 and CT W-4 form
12EE Income Tax Withholding Withholding table on page 310 and 311Different table for various payroll periodsMonthly, semimonthly, biweekly, weekly, and dailyRevised each yearCurrent tax table (http://www.irs.gov/pub/irs-pdf/p15.pdf)Determine Rick E. Selby’s tax withholding using the table on page 311 then using the website above.
13EE Social Security and Medicare Tax Social Security tax – federal tax paid for old-age, survivors, and disability insuranceMedicare tax – federal tax paid for hospital insuranceTax base – max amount of earnings that can be taxed (current tax base
14Calculating Social Security tax Total SS Tax SS TaxEarnings x Rate = Deduction$1, x 6.5% = $73.91*Amounts taken from Rick E. Selby’s time card on page 306 and page 312
15Calculating Medicare tax Total Medicare Medicare TaxEarnings x Tax Rate = Deduction$1, x 1.5% = $17.06*Amounts taken from Rick E. Selby’s time card on page 306 and page 312
18Payroll RegisterPayroll Register – a business form used to record payroll informationSummarizes the payroll for one pay period and shows:total earningspayroll withholdingsNet pay
19Preparing a Payroll Register Date (last date of semimonthly payroll) at top, left of RegisterDate of payment at top, right of RegisterEmployee informationNumberNameMarital StatusNumber of AllowancesLook at Rick E. Selby on line 5
20Preparing a Payroll Register (con’t) Enter earnings from time cardRegularOvertimeTotalEnter Deductions: Fed Income TaxEnter Deductions: SS TaxEnter Deductions: Medicare TaxEnter Deductions: Health Insurance PremiumsEnter Deductions: Other Deductions (United Way for RES)Look at Rick E. Selby on line 5
21Preparing a Payroll Register (con’t) Add deductions in column 9FIT SS Tax Medi Tax Health Ins Other = TotalDetermine Net Pay (total earnings paid after payroll taxes and other deductions)Total earnings Total Deductions = Net payTotal, prove, and rule the payroll registerPayroll Checks are written after calculations are verified and a partner approves the payroll. Write the check number in the appropriate column of the register.
22Employee Earnings Record Quarterly Reports sent to federal and state government showing EE taxable earnings and taxes withheld from EE earningsCalled EE Earnings RecordEarnings and deductions for each pay period are summarized on one line of the EE earnings recordLook at Rick E. Selby’s earnings record on page 316
23Preparing an EE Earnings Record Date of last day of quarter on top, rightEnter EE:NumberNameMarital StatusWithholding AllowancesHourly RateSS NumberPositionFiscal year accumulated earnings
24Preparing an EE Earnings Record (con’t) Last day of pay period being recordedEnter EE:EarningsDeductionsNet PayCalculate Accumulated Earnings:Accum Earnings Total Earnings Accum Earningsas of 12/1 + for Pay Per. End = as of 12/1512/15Total and prove the earnings for each EETotal Earnings - Total Deductions = Net Pay
25Other NotesNet pay calculated in step 7 is compared to the total of the Net Pay columnTotal earnings (not net pay) are added to the previous accumulated earnings amount on the earnings record.
28Payroll Bank Account Entirely separate bank account Protects & controls payroll paymentsGeneral bank account check written for exact payroll amount each pay period & deposited into payroll bank account
29Preparing a check for total net pay Check stub FIRSTDate of checkAmount from PR RegisterPayable to Payroll AccountFor: pay periodPrepare check and signDeposited into payroll checking account
30EE’s Payroll Check Information taken from payroll register Similar procedure for preparing personal checksEE keeps stub for their record