ANALYZING A PAYROLL TIME CARD Lesson 13-1, page 312 Omni uses a time clock – provides “internal control”

CALCULATING EMPLOYEE HOURS WORKED – p Add Hours Reg and Hours OT columns and enter totals. 3 4.Add Hours column. 4 2.Calculate overtime hours. ***anything over 8 hrs 2 Lesson 13-1, page Calculate regular hours. ***rounded to the nearest quarter hour 1 7:07 = 7:00 7:08 = 7:15 8:00 12:00 1:00 5:00

CALCULATING EMPLOYEE TOTAL EARNINGS Lesson 13-1, page Enter the rate for overtime. **Salaried employees usually do not get overtime pay **Overtime rate is usually 1 and ½ times regular pay rate (12+6=18, 12*1.5=18) 1 1. Enter the rate for regular time. 4 4.Calculate overtime earnings. 2 2.Calculate regular earnings. 5 5.Calculate total earnings. (aka gross pay or gross earnings)

Work Together 13-1 (p.315 wb283) & On Your Own 13-1 (p.315 wb284) Time and a half

PAYROLL TAXES Payroll Taxes – taxes based on the payroll of a business –the largest source of income for the federal govt. Must be accurate!! Employer withholds taxes and holds them until they are due to the government Payroll taxes withheld are a LIABILITY for the employer until payment is made to the government **we have the cash, but it is not an asset **to truly be an asset, the item needs to be working for us **delivery van, cash being used to buy inventory, etc.

EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE – W-4 Lesson 13-2, page Marital Status 1 1. Name and Address 4 4.Withholding Allowances 2 2.Social Security Number 5 5.Signature and Date Must be kept current low-income and part-time employees must meet requirements in item 7 Still cannot if 1) income exceeds $800 and includes interest and dividends 2) another person can claim them as a dependent on their tax return

EMPLOYEE’S INCOME TAX WITHHOLDING—MARRIED PERSONS – p.319 Lesson 13-2, page 319 Pay period earnings of $1, & 4 allowances 63 1,120 – 1,140 p. 319 $1,521 & 0 allowances? $920 & 8 allowances?

EMPLOYEE’S INCOME TAX WITHHOLDING—SINGLE PERSONS Lesson 13-2, page 318

DETERMINING HOW MANY ALLOWANCES TO ENTER If the employee chooses a high number of allowances, a low amount of money will be taken out 6 allowances – withhold $1, If the employee chooses a low number of allowances, a high amount of money will be taken out 1 allowance – withhold $6, Tax bill comes at the end of the year – you owe $5,000 $4,000 Bill ;-( $1,000 Check ;-)

WITHHOLDING ALLOWANCES A married employee will have less income tax withheld than a single employee with the same total earnings The larger the number of withholding allowances claimed, the smaller the amount of income tax withheld (less moolah they take from you)

EMPLOYEE SOCIAL SECURITY AND MEDICARE TAX SOCIAL SECURITY TAX – a federal tax paid for old age, survivors, and disability insurance MEDICARE TAX– a federal tax paid for hospital insurance BOTH of these taxes are paid by BOTH the employer and the employee Employers are expected to MATCH the amount (if an employee contributes 52.00, the business contributes on the employee’s behalf) Social Security tax is calculated on employee earnings up to a maximum paid in a calendar year TAX BASE – the maximum amount of earnings on which a tax is calculated Medicare does not have a tax base – calculated on total earnings Set by Congress – 6.5% up to a max of $65, (106,800 for 2009) 1.5%

EMPLOYEE SOCIAL SECURITY AND MEDICARE TAX Total Social SecuritySocial Security Earnings  Tax Rate=Tax Deduction Total MedicareMedicare Earnings  Tax Rate=Tax Deduction   Calculate Social Security Tax Deduction   Calculate Medicare Tax Deduction $1,  6.5%=$73.91 $1,  1.5%=$17.06 Lesson 13-2, page % =.065 on calculator (move over 2 decimal places) 1.5% =.015 on calculator (move over 2 decimal places)

Work Together 13-2 (p.321 wb285) & On Your Own 13-2 (p.321 wb285) WT OYO Chart 6.5% 1.5%

PAYROLL REGISTER Lesson 13-3, page Employee Personal Data 1 1. Pay Period Date 4 4.Earnings 2 2.Payment Date 5 5.Federal Income Tax (chart) 6 6.Social Security Tax 6.5% Total Deductions 8 8. Health Insurance Net Pay (total earnings – deductions) Total, Prove, and Rule 7 7. Medicare Tax 1.5% Approved? Check Number 9 9.Other Deductions B – Bonds UW – United Way

EMPLOYEE EARNINGS RECORDS Lesson 13-3, page 324 Each employee’s earnings and deductions for each pay period are summarized on one line of the employee earnings record One for EACH employee for each quarter WHAT IS A QUARTER? 1 st Quarter – January, February, March 2 nd Quarter – April, May, June 3 rd Quarter – July, August, September 4 th Quarter – October, November, December

EMPLOYEE EARNINGS RECORDS Lesson 13-3, page Beginning Accumulated Earnings 1 1. Last day of Quarter 4 4.Pay Period 6 6.Updated Accumulated Earnings (GROSS not net) 2 2.Employee Personal Data 5.Earnings, Deductions, Net Pay Total and Prove at the end of each quarter Total Earnings-Total Deductions equal to ?

Work Together 13-3 (p.326 wb287) & On Your Own 13-3 (p.326 wb288)

WT Chart 6.5% 1.5% = GROSS EARNINGS

PAYROLL BANK ACCOUNT Lesson 13-4, page 327 General Bank Account = 31, , to payroll

PAYROLL BANK ACCOUNT 1 1.Prepare the check stub. 2 2.Prepare the check. Lesson 13-4, page 327 Omni opened a separate account for payroll – Internal Control Exact amount needed is deposited – Omni is alerted of alterations

EMPLOYEE’S PAYROLL CHECK 1 1.Enter check stub information from payroll register. 2 2.Prepare employee’s payroll check for net amount of earnings. Lesson 13-4, page 328

Work Together 13-4 (p.326 wb289) & On Your Own 13-4 (p.326 wb290)

WT

Applications 1 – Preparing Payroll Time Cards *No employee will have more than 80 regular hours Marie Kerns’ Total Earnings = – Determining Payroll Tax Withholding *Withholding (chart), Soc. Sec. (6.5%), Medicare (1.5%) Tony Baird = , 79.30, – Preparing a Payroll Register *Same concepts as 1 & 2, using official Payroll Register form *Get “Health” and “Other” information from directions *Be sure to total, prove and rule Total Net Pay = – Preparing an Employee Earnings Record *Accumulated Earnings are GROSS earnings 9/30 Accumulated Earnings = Total Net Pay = – Preparing Payroll Checks *The first check is from the General Account to the Payroll Account *Write the remaining 2 checks from the Payroll Account to the Employees *Fill out the details on the check stubs 6 – Preparing a Semimonthly Payroll *Abbreviate by writing last name only & you do not need to rewrite regular & overtime amounts…just write in the total earnings Total Net Pay = …write the first check from the General Account to the Payroll Account for this amount *After writing the checks to the employees, enter the check # on the Pay. Reg.

App 13-1 answer (1/3 of it)