Payroll

In regards to a company, payroll is defined as the collection of financial records of wages, bonuses, deductions, and salaries for an employee. In terms of accounting, the term means the wages paid to employees for services that they provided for a designated amount of time. Payroll is vital to a company because it, along with payroll taxes, greatly impacts the net income of businesses. Ethically speaking, it is important because those employed by the company are tasked with reporting and remedying errors and irregularities.

The main goal of this department is to make sure that each and every employee is correctly paid in a timely manner with accurate withholdings and deductions, and to make sure that the same deductions and withholdings are returned in a timely manner. This includes salary payments, deductions, and tax withholdings from an employee's paycheck.

By law, employers have to withhold taxes from their employees’ checks and offer them to several tax agencies. These taxes include:

• federal income tax withholding, which is determined by withholding tables by the IRS
• Social Security tax withholding where the employee must pay 4.2 percent (returning to 6.2 percent in 2012) of the wage or salary, up to $106,800
• Medicare tax withholding where the employee must pay 1.45 percent

Employers must pay 6.2% for Social Security tax and 1.45% for Medicare tax. The self-employed must pay the sum of the employee and employer amount of 12.4 % in Social Security taxes on their total amount earnings and 2.9 percent in Medicare taxes. Many employees are also susceptible to state income tax withholdings, including various local taxes such as county taxes and city taxes.

Alternatively, businesses have the option of having someone else handle their payroll functions. In most cases this can save them money on having a trained employee and the amount and not maintaining software and systems required.

Continued Payroll Definitions
Online Payroll   /   Payroll Deductions

Some articles that relate to Payroll
Meeting Minimum Tax Requirements   /   Seven Things You Don't Have to Pay Taxes On
Avoiding Lawsuits from Employees and Contractors   /   How to Avoid the Pitfalls of Starting a Small Business
How to Put Together a Media Kit for Your Small Business   /   Should I Outsource Payroll?

Some videos that relate to Payroll
SurePayroll Owns Your Payroll Worries   /   Why Outsource Payroll?
What to Look for in a Payroll Service   /   Small Business Payroll Videos

Some resources that relate to Payroll
Payroll for Religious Organizations   /   Paycheck Calculators
Payroll Made Easy   /   Payroll Services   /   Federal Tax Information

Some questions that relate to Payroll
Should I Hire Employees or Stick with Contractors?   /   Should I Outsource Payroll?