Chapter 12 Preparing Payroll Time Cards

2 L 12-1 Paying Employees page 341 Money paid for employee services is called a salary. The period covered by a salary payment is called a pay period. The total amount earned by all employees for a pay period is called payroll. A payroll system must include an accurate record of the time each employee has worked. Hobby Shack uses a time card.

3 L 4.Add the Hours column. CALCULATING EMPLOYEE HOURS WORKED page Add Hours Reg and Hours OT columns and enter the totals. 2.Calculate the number of overtime hours and enter the amounts. 1.Calculate the number of regular hours for each day and enter the amounts.

4 L CALCULATING EMPLOYEE TOTAL EARNINGS page Enter the rate for regular time in the Rate column. 2.Calculate the regular earnings. Enter the amount. 3.Enter the rate for overtime. 4.Calculate the overtime earnings. Enter the amount. 5.Add the Amount column to calculate total earnings. Enter the amount of total earnings.

LESSON 12-2 Determining Payroll Tax Withholding Payroll Taxes are taxes based on the payroll of a business. A business is required by law to withhold certain payroll taxes from employees salaries. All payroll taxes are based on employee total earnings. If payroll is reported incorrectly the business could be charged a state or federal penalty. Payroll taxes withheld represent a liability for the employer until payment is made to the government.

6 L EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE page Write the employee’s name and address 2.Write the employee’s social security #. 3.Check the appropriate marital status block. 4.Write the total # of withholding allowances claimed. 5.The employee signs and dates the form. The info from the W4 is used to determine the amount of income tax to be withheld from employee pay. -Marital Status -Withholding Allowances (dependents) Employers are required to have a Form W-4 on file for each employee.

7 L EMPLOYEE’S INCOME TAX WITHHOLDING – MARRIED PERSONS page Select the appropriate table. 2.Locate the employee’s total earnings. 3.Intersection of wages and number of allowances column.

8 L Social Security & Medicare Tax FICA - Federal Insurance Contribution Act provides for old-age, Survivors, disability, and hospital Insurance. Social Security - old age, survivor, & disability 6.2% of earnings up to $87,000 tax base. Medicare - hospital insurance 1.45% of total earnings - no maximum.

9 L 12-3 PAYROLL REGISTER page Health insurance premium deductions 2. Payment date 3. Employee personal data 9. Other employee payroll deductions 4. Earnings 10. Total deductions 5. Federal income tax withheld 11. Net pay 6. Social security tax withheld 12. Total, prove, and rule 7. Medicare tax withheld 13. Check number 1. Pay period date A Business form used to record payroll information is a payroll register. Total Earnings (3) - Total Deductions (10) = Net Pay (11)

10 L EMPLOYEE EARNINGS RECORDS page Total and prove 5.Earnings, deductions, net pay 2.Employee personal data 1 1.Last day of quarter 4.Pay period 3.Beginning accumulated earnings 6. Updated accumulated earnings Employee earning records are used to record details affecting payments made to an employee.

11 L 12-4 Preparing Payroll Checks 1.Prepare the check stub. page Prepare the check. 1 2 A check for the total amount of net pay is written with a check from The General Account and deposited into the Payroll Account.

12 L EMPLOYEE’S PAYROLL CHECK page Prepare the check stub of each employee’s payroll check. 2.Prepare each employee’s payroll check. 2 1 From the Payroll Account you prepare employee checks with information provided in the Payroll Register.