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Preparing Payroll Records

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1 Preparing Payroll Records
Chapter 13

2 Paying Employees p. 304 Salary – the money paid for employee service
Pay period – the period covered by a salary payment Payroll – The total amount earned by all employees for a pay period Must be reduced by state and federal taxes and other deductions Payroll records used to: Record payroll Provide annual records to employees

3 Preparing Payroll Time Cards
Lesson 13-1 Page 304

4 Analyzing Time Cards Time cards used as basic source of information to prepare payroll Omni uses a time clock to record daily arrival and departure times Look at Rick E. Selby’s time card Three sections: Morning, Afternoon, Overtime Arrival, lunch, left for the day

5 Calculating EE Hours Worked
Calculate regular hours Departure Time Arrival Time = Hours Worked 12: :55 = 12: :00 = :00 *ROUND TO THE NEAREST QUARTER HOUR Calculate overtime hours Total regular hours, Total overtime hours

6 Calculating EE Total Earnings
Total Earnings – total pay due for a pay period before deductions Enter regular rate Calculate the regular earnings Regular Hours x Regular Rate = Regular Earnings x $ = $1,056.00 Enter overtime rate (1.5 times regular rate) Regular Rate x = Overtime Rate $ x = $18.00 Calculate overtime Add the amount column to calculate total earnings

7 Complete 13-1 WT & OYO Page 307

8 Determining Payroll Tax Withholding
Lesson 13-2 Page 308

9 Payroll Taxes Payroll Taxes – taxes based on the payroll of a business
Based on employee total earnings Penalty for failure to pay correct taxes when due LIABILITY for employer until payment is made to the government Employee Income Tax Business must withhold federal income tax Forwarded periodically to the federal government State and city income tax can also be withheld

10 How many of you have a job?
Form W-4 Determines the amount of tax to withhold

11 EE’s Withholding Allowance
Withholding Allowance – a deduction from total earnings for each person legally supported by a taxpayer, including the employee Married employee has less withheld than single The more allowances the less tax withheld EXEMPT – low-income and part-time employees Fill out a federal W-4 and CT W-4 form

12 EE Income Tax Withholding
Withholding table on page 310 and 311 Different table for various payroll periods Monthly, semimonthly, biweekly, weekly, and daily Revised each year Current tax table ( Determine Rick E. Selby’s tax withholding using the table on page 311 then using the website above.

13 EE Social Security and Medicare Tax
Social Security tax – federal tax paid for old-age, survivors, and disability insurance Medicare tax – federal tax paid for hospital insurance Tax base – max amount of earnings that can be taxed (current tax base

14 Calculating Social Security tax
Total SS Tax SS Tax Earnings x Rate = Deduction $1, x 6.5% = $73.91 *Amounts taken from Rick E. Selby’s time card on page 306 and page 312

15 Calculating Medicare tax
Total Medicare Medicare Tax Earnings 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

16 Complete 13-2 WT & OYO Page 313

17 Preparing Payroll Records
Lesson 13-3 Page 314

18 Payroll Register Payroll Register – a business form used to record payroll information Summarizes the payroll for one pay period and shows: total earnings payroll withholdings Net pay

19 Preparing a Payroll Register
Date (last date of semimonthly payroll) at top, left of Register Date of payment at top, right of Register Employee information Number Name Marital Status Number of Allowances Look at Rick E. Selby on line 5

20 Preparing a Payroll Register (con’t)
Enter earnings from time card Regular Overtime Total Enter Deductions: Fed Income Tax Enter Deductions: SS Tax Enter Deductions: Medicare Tax Enter Deductions: Health Insurance Premiums Enter Deductions: Other Deductions (United Way for RES) Look at Rick E. Selby on line 5

21 Preparing a Payroll Register (con’t)
Add deductions in column 9 FIT SS Tax Medi Tax Health Ins Other = Total Determine Net Pay (total earnings paid after payroll taxes and other deductions) Total earnings Total Deductions = Net pay Total, prove, and rule the payroll register Payroll Checks are written after calculations are verified and a partner approves the payroll. Write the check number in the appropriate column of the register.

22 Employee Earnings Record
Quarterly Reports sent to federal and state government showing EE taxable earnings and taxes withheld from EE earnings Called EE Earnings Record Earnings and deductions for each pay period are summarized on one line of the EE earnings record Look at Rick E. Selby’s earnings record on page 316

23 Preparing an EE Earnings Record
Date of last day of quarter on top, right Enter EE: Number Name Marital Status Withholding Allowances Hourly Rate SS Number Position Fiscal year accumulated earnings

24 Preparing an EE Earnings Record (con’t)
Last day of pay period being recorded Enter EE: Earnings Deductions Net Pay Calculate Accumulated Earnings: Accum Earnings Total Earnings Accum Earnings as of 12/1 + for Pay Per. End = as of 12/15 12/15 Total and prove the earnings for each EE Total Earnings - Total Deductions = Net Pay

25 Other Notes Net pay calculated in step 7 is compared to the total of the Net Pay column Total earnings (not net pay) are added to the previous accumulated earnings amount on the earnings record.

26 Complete 13-3 WT & OYO Page 318

27 Preparing Payroll Checks
Lesson 13-4 Page 319

28 Payroll Bank Account Entirely separate bank account
Protects & controls payroll payments General bank account check written for exact payroll amount each pay period & deposited into payroll bank account

29 Preparing a check for total net pay
Check stub FIRST Date of check Amount from PR Register Payable to Payroll Account For: pay period Prepare check and sign Deposited into payroll checking account

30 EE’s Payroll Check Information taken from payroll register
Similar procedure for preparing personal checks EE keeps stub for their record

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