Preparing Payroll Records Chapter 13 Preparing Payroll Records

Preparing Payroll Salary- money paid for employees services (pay for hours worked) Pay Period- period covered by salary payment (every week, every 2 weeks, 2x month, once a month). Omni uses semi-monthly Payroll- total amount earned by all employees for a pay period (reduced by federal, state taxes and deductions

13.1 Preparing Payroll-Time Cards Analyzing a Payroll Time Card- used for accurate reporting of time worked Shows employee #, employee name and pay period Includes when employee arrives, leaves for lunch, returns for lunch and leaves for the day. Also includes any additional over time

Calculating Employee Hours Worked Calculate total regular hours worked; round to nearest 15 minutes Calculate overtime hours worked to nearest quarter hour Add regular hours and overtime hours to determine total hours worked

Calculate Employee Total Earnings Total Earnings- total pay due for a pay period before deductions; sometimes called gross pay Multiply regular hours by regular rate to find regular earnings Multiply overtime hours by overtime rate to find overtime earnings Add together to find total earnings for the pay period

13.1 Review: p. 315 Terms Review Audit Your Understanding #1-4 Work Together #5 On Your Own #6

13.2: Determining Payroll Tax Withholding Payroll Taxes- taxes based on the payroll of a business Businesses required by law to withhold certain payroll taxes Penalty for failure to pay correct payroll taxes Employee Income Tax- withheld from employee’s total earnings and periodically forwarded to federal government (this is the same for state taxes)

Employee’s Withholding Allowance AKA: W4-required for all employees to be kept on file by employer Withholding Allowance-a deduction from total earnings for each person legally supported by a taxpayer including the employee- based on marital status and # of withholding allowances Some Exceptions: some low-income or part-time employees (called exempt) To be exempt: earnings are < $700 or someone else can claim them as a dependent on their tax return

Prepare a W4 Write Employees name and address, social security # in appropriate boxes Check marital status # of withholding allowances Employee signs and dates

Determining Income Tax Withholding Amount of income tax withheld is based on employees’ total earnings and marital status- use IRS Table- revised every year Tables are broken down by payroll period type

Social Security and Medicare Tax Social Security Tax- federal tax paid for old-age, survivors and disability insurance Medicare Tax- a federal tax paid for hospital insurance Both are provided by FICA- Federal Insurance Contributions Act Both taxes are paid by employer and employee Social Security tax- calculated by a tax base- max amount of earnings on which a tax is calculated. This text uses 6.5% of earnings up to a max of 65,400.00 per year Total Earnings * 6.5% Tax Rate = Social Security Tax Deduction Medicare Tax- This text uses a rate of 1.5% of total earnings Total Earnings * 1.5% Tax Rate= Medicare Tax Deduction

13.2 Review: p. 321 Terms Review Audit Your Understanding #1-3 Work Together #4-5 On Your Own #6-7

13.3 Preparing Payroll Records Payroll Register- a business form used to record payroll information such as: Pay Period Date, Payment Date Employee Name, Earnings (Reg, OT, Total), Fed Income Tax, SS Tax, Medicare Tax, Health Insurance Deductions*, Other Deductions*, Total Deductions Net Pay (= Total Earnings-Total Deductions) Check # Total, Prove and rule each amount column

Employee Earnings Records A business form used to record details affecting payments made to an employee Form is usually prepared quarterly Includes: Date (last day of quarter), Employee info, Carry over previous accumulated earnings Write the Pay Period, Fill in Earnings, Deductions and Net Pay Update Quarterly Accumulated Earnings and Total/Prove

13.3 Review p. 326 Terms Review Audit Your Understanding #1-3 Work Together #4-6 On Your Own #7-9

13.4 Preparing Payroll Checks Payroll Bank Account Preparing a Check- Fill in Check Stub, Prepare the Check A check from the general checking account is deposited to replenish the payroll checking account

Employee’s Payroll Check Prepare the check by filling in check stub Check is written for employee’s NET earnings

EFT Electronic Funds Transfer Direct Deposit into employee’s bank account This is for NET pay only Employee only receives a statement or stub

13.4 Review p.329 Audit Your Understanding Work Together #4-5 On Your Own #6-7

Application Application Problems 13.1-13.5