LESSON 12-1 Preparing Payroll Time Cards 4/24/2017 LESSON 12-1 Preparing Payroll Time Cards

Paying Employees The money paid for employee services is called a salary. The period covered by a salary payment is called a pay period. A business may decide to pay employee salaries every week, every two weeks, twice a month, or once a month. Hobby Shack uses a semimonthly pay period. Employees are paid twice a month, on the 15th and last day of each month.

Paying Employees The total amount earned by all employees for a pay period is called a payroll. The payroll is reduced by state and federal taxes and other deductions, such as health insurance, to determine the amount paid to all employees. Special payroll records support the recording of payroll transactions in a journal. The business also uses these records to inform employees of their annual earnings and to prepare payroll reports for the government.

ANALYZING A PAYROLL TIME CARD page 341 LESSON 12-1

CALCULATING EMPLOYEE HOURS WORKED page 342 1. Calculate the number of regular hours for each day and enter the amounts. 1 2. Calculate the number of overtime hours and enter the amounts. 3. Add Hours Reg and Hours OT columns and enter the totals. 2 4. Add the Hours column. 3 4 LESSON 12-1

CALCULATING EMPLOYEE TOTAL EARNINGS page 343 1. 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. 1 2 4 3 5 LESSON 12-1

TERMS REVIEW salary pay period payroll total earnings page 344 LESSON 12-1

LESSON 12-2 Determining Payroll Tax Withholding 4/24/2017 LESSON 12-2 Determining Payroll Tax Withholding

Payroll Taxes Taxes based on the payroll of a business are called payroll taxes. A business is required by law to withhold certain payroll taxes from employee salaries. All payroll taxes are based on employee total earnings. Errors in payroll records could cause incorrect payroll tax payments. Federal and state governments may charge a business a penalty for failure to pay correct payroll taxes when they are due.

Employee Income Tax Required in all 50 states: Federal Income Tax State Tax City Tax County Tax The information used to determine the amount of income tax withheld is identified on Form W-4, Employees Withholding Allowance Certificate. A deduction from total earnings for each person legally supported by a taxpayer, including the employee, is called a withholding allowance.

EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE page 346 3 2 1 4 5 1. Write the employee’s name and address 2. Write the employee’s social security number. 3. Check the appropriate marital status block. 4. Write the total number of withholding allowances claimed. 5. The employee signs and dates the form. LESSON 12-2

EMPLOYEE’S INCOME TAX WITHHOLDING – MARRIED PERSONS page 348 1 2 3 1. Select the appropriate table. 2. Locate the employee’s total earnings. 3. Intersection of wages and number of allowances column. LESSON 12-2

Employee Social Security and Medicare Tax The Federal Insurance Contributions Act (FICA) provides for a federal system of old age, survivors, disability, and hospital insurance. A federal tax paid for old-age, survivors, and disability insurance is called social security tax. A federal tax paid for hospital insurance is called Medicare Tax. Each of these taxes is accounted for and reported separately.   The maximum amount of earnings on which a tax is calculated is called a tax base.

Employee Social Security and Medicare Tax Ex. The social security tax rate base and tax rate at any time. The social security tax rate and base used in this text are 6.2% of earnings up to a maximum of $87,000 in each calendar year. Total earnings x Social Security Tax Rate = Social Security Tax Deduction $1,137.00 x 6.2% = $70.49

TERMS REVIEW payroll taxes withholding allowance social security tax page 350 payroll taxes withholding allowance social security tax Medicare tax tax base LESSON 12-2

LESSON 12-3 Preparing Payroll Records 4/24/2017 LESSON 12-3 Preparing Payroll Records

Payroll Register A business form used to record payroll information is called a payroll register. The total earnings paid to an employee after payroll taxes and other deductions is called a net pay.

PAYROLL REGISTER 1. Pay period date page 351 1 2 11 4 5 6 7 8 9 10 3 13 12 1. Pay period date 8. Health insurance premium deductions 2. Payment date 9. Other employee payroll deductions 3. Employee personal data 10. Total deductions 4. Earnings 11. Net pay 5. Federal income tax withheld 12. Total, prove, and rule 6. Social security tax withheld 13. Check number 7. Medicare tax withheld LESSON 12-3

Employee Earnings Records A business form used to record details affecting payments made to an employee is called an employee earnings record.

EMPLOYEE EARNINGS RECORDS page 353 1. Last day of quarter 4 2. Employee personal data 5 3. Beginning accumulated earnings 1 2 4. Pay period 3 5. Earnings, deductions, net pay 6 6. Updated accumulated earnings 7 7. Total and prove LESSON 12-3

TERMS REVIEW payroll register net pay employee earnings record page 355 payroll register net pay employee earnings record LESSON 12-3

LESSON 12-4 Preparing Payroll Checks 4/24/2017 LESSON 12-4 Preparing Payroll Checks

PAYROLL BANK ACCOUNT 1. Prepare the check stub. 2. Prepare the check. page 356 1 2 1. Prepare the check stub. 2. Prepare the check. LESSON 12-4

EMPLOYEE’S PAYROLL CHECK page 357 1 2 1. Prepare the check stub of each employee’s payroll check. 2. Prepare each employee’s payroll check. LESSON 12-4