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Preparing Payroll Records

Preparing Payroll Records. Chapter 13. 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

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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 12:01 - 7:55 = 12:00 - 8:00 = 4:00 *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 88 x $12.00 = $1,056.00 • Enter overtime rate (1.5 times regular rate) Regular Ratex 1.5 = Overtime Rate $12.00 x 1.5 = $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 (http://www.irs.gov/pub/irs-pdf/p15.pdf) • 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 http://www.ssa.gov/oact/COLA/cbb.html)

  14. Calculating Social Security tax Total SS Tax SS Tax Earnings x Rate = Deduction $1,137.00 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 $1,137.00 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 Total earnings - Total Deductions = Net pay • 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 006863274 • 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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