Payroll refers to the employees you pay, along with employee information. Or A payroll or wage is a set of employees whose pay you process with a single frequency, for example, weekly or monthly. You can define as many payrolls as you require to meet the pay policies of your enterprise. You put an employee on a payroll by assigning him or her to the payroll. Gratuity is a cash benefit provided by an employer to an employee for the services rendered to the organization. It is paid at the time of retirement, resignation, layoff or termination, provided the employee has completed five years of continuous services before leaving the organization. Gratuity = (Basic salary + DA) x 15/26 x number of years. Withholding Tax is an obligation on the payer to withhold tax at the time of making payment under specified head such as rent, commission, salary, professional services, contract etc. at the rates specified in tax regime. A payroll correction is required when adjustments need to be made to amounts paid. Poor payroll organization, like forgetting to account for vacation days, can cause the need for money to be added or subtracted from the original amount. It is simply recording the payroll expenses of a business into the general ledger. Payroll accounting involves both expense and liabilities accounts such as FICA Taxes Payable, Federal and State Income Tax Payable, Health Insurance Premiums Payable, etc. These documents are the employee time sheet or other equaling documents that record when the employee worked and generally what they did. these records are subject to audit by the labor department. EEOC and probably others that I haven’t encountered. These should be bound into a Payroll Source Document folder. Form W-2 means Wage and Tax Statement. A W-2 tax form reports the amount of taxes withheld from your pay check for the year. The W-2 form is the form you receive at the beginning of the calendar year that you use to file your federal and state taxes for the prior tax year. Therefore, you should only receive a W-2 if you are an employee. If you’re a freelancer, independent contractor or self-employed, you will receive an earnings statement on tax form 1099 instead of a W-2. IRS (Internal Revenue Service) Form W-4, Employee’s Withholding Certificate, is an IRS form new employee must fill out. On Form W-4, employees can enter information you’ll use to determine how much federal income tax to withhold from their wages. Form W-9 is an Internal Revenue Service form. It is used to determine the employees’ payroll. This information is used to determine pay checks and the number of withholdings on the employees’ taxes. The employee will send this form to their employer for them to determine how much to take out. The W9 form contains information like an individual name, whether or not they are operating a business, and their tax classification. Accounts Payable: It is recorded in the Accounts Payable sub-ledger when an invoice is approved for transactions where the company must pay money to vendors for the purchase services or goods. It is a current liability account in your chart of accounts that accounts for invoices that your business owes and pays. Payroll: It is defined as the cost that your small business accrues as part of paying your employees. It is a current liability account too, but is recorded separately from accounts payable entries. Here are the Payroll Errors or Mistakes: Employees need to be reimbursed on their expenses in their payroll Every time the timesheets needs to be sent to payroll, a manager needs to collect it and send it out Vouching in general is a term used for agreeing and siding with someone over a matter. Vouching is the examination of the underlying evidence which is in support of the accuracy of the transaction. The process of vouching is intended to substantiate an entry by providing authority, ownership, existence and accuracy. Computerized payroll systems include complete employee information including loans, pay structures, reimbursements, salary slip generation and income tax management. Since everything is computerized, it is easy to handle calculations and manage printing activities. This will include the making of various reports like deduction reports, wage type, leave or absentee reports, new hire reports, LWAP reports and many others. A payroll system is software you can use to run payroll. The system can be desktop software you install on your computer or cloud payroll software you can access anywhere with an internet connection. A payroll system can help you complete most or all of your payroll tasks, including: Cost to the company (CTC) is the amount that the company will have to incur on an employee for a specific year. It means total salary package & benefits received by employee in a year their portion of the medical aid contribution, travel allowance, cell allowance, pension fund, etc. Cost To Company = Gross Salary+ Benefits It is referring to income that is received but that is not subject to taxation. However, even if such forms of compensation cannot be taxed, they still need to be reflected in the tax return. Here are some examples of non-taxable income: Retropay : It is a process that recalculates the amount to pay an employees in the current period to account for retrospective changes that occurred in previous payroll periods. Payroll transaction: It is nothing but the calculation of salary for a month / week / day of an individual / group of employees depends upon the attendance / variable inputs / other benefits / salary component and generate the reports for IT / Statutory / PT payments. Internal audit is an independent appraisal function which is established by the management of an organization for the review of its internal control system as a service to the organization. Payroll managers compile payroll data, verify time and attendance and process periodic transfers of pays to different accounts. It is the total amount of money an employee receives before taxes and deductions are taken out. FLSA stands for the Fair Labour Standards Act. It contains constitutional guidelines regarding minimum wages, overtime, absentee record keeping protocols and the like. Pay check is the method by which the Employee is paid (A Bank Check/Cheque or Direct Deposit to Bank) Payslip is a slip that contains all details of the employees like total wages, deduction details, tax cuttings and the like. Here is a list of best payroll software for small, medium, and large businesses By using below calculation methods Payroll deductions include many different items, including: What is Payroll?
What is Gratuity?
What are the different types of payroll accounting journal entries?
Can you define Withholding Tax?
What is a Payroll Correction?
What is Payroll Accounting?
What are payroll source documents?
What is Form W-2?
What is Form W-4?
What is the Form W-9?
What is the difference between Accounts payable and Payroll?
What are the common Payroll Errors?
How to Avoid Payroll Errors?
Can you explain Vouching?
Can you define Computerized Payroll Systems?
What kinds of payroll reporting you are aware about?
What is a payroll system?
What can a payroll system do?
Can you define CTC?
What is Non-taxable income?
Can you define retropay?
Can you define Payroll transaction?
Can you explain Internal Audit?
Can you explain, what work involves in payroll clerk?
Can you define gross pay?
Can you define FLSA?
What is the difference between Pay Check and Pays lip?
What are some Payroll software’s?
What are Pay Codes in Payroll software?
How to calculate deduction?
What are Payroll Deductions?
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