A payroll is the list of employees of some company that is entitled to receive payments as well as other work benefits and the amounts that each should receive.[1] Along with the amounts that each employee should receive for time worked or tasks performed, payroll can also refer to a company's records of payments that were previously made to employees, including salaries and wages, bonuses, and withheld taxes,[2] or the company's department that deals with compensation. A company may handle all aspects of the payroll process in-house or can outsource aspects to a payroll processing company.
Handling payroll typically involves sending out payslips to employees.
Companies typically process payroll at regular intervals. This interval varies from company to company and may differ within the company for different types of employee.
Weekly — 31.8% — Fifty-two 40-hour pay periods per year and include one 40 hour work week for overtime calculations.
Biweekly — 45.7% — Twenty-six 80-hour pay periods per year, consisting of two 40 hour work weeks for overtime calculations.
Semi-monthly — 18.0% — Twenty-four pay periods per year with two pay dates per month. Compensation is commonly paid on either the 1st and the 15th day of the month or the 15th and the last day of the month and consists of 86.67 hours per pay period.
Monthly — 4.4% — Twelve pay periods per year with a monthly payment date. Each monthly payroll consists of 173.33 hours.
This frequency changes based on the establishment size, or the maximum number of employees within the business over the previous 12 months.[4]
Frequency of pay periods by size class in the CES survey, February 2022
Size
Weekly
Biweekly
Semimonthly
Monthly
1-9
31.1%
36.0%
23.0%
10.0%
10-19
33.4%
45.9%
20.1%
0.6%
20-49
40.5%
44.1%
13.4%
2.1%
50-99
29.7%
54.4%
14.7%
1.2%
100-249
29.3%
56.4%
12.8%
1.5%
250-499
23.8%
64.0%
12.0%
0.3%
500-999
22.8%
63.9%
12.8%
0.5%
1000+
21.6%
67.6%
9.8%
0.9%
Components
Gross pay
Gross pay, also known as gross income, is the total payment that an employee earns before any deductions or taxes are taken out.[5] For employees that are hourly, gross pay is calculated when the rate of hourly pay is multiplied by the total number of regular hours worked. If the employee has overtime hours, these are multiplied by the overtime rate of pay, and the two amounts are added together.[6] Also included in gross pay is any other type of earnings that an employee may have. These may include holiday pay, vacation or sick pay, bonuses, and any miscellaneous pay that the employee may receive.
Deductions
There are a wide array of voluntary deductions that can be taken out of an employee's gross pay, some of which are taken out before taxes and some being taken out after taxes. Pre-tax deductions are deductions that are taken out of an employee's gross pay amount before it is subject to tax.[7] and could include health, dental, or life insurance, deductions for certain retirement accounts, or deductions for FSA or HSA accounts.
After-tax deductions are deductions that are occur after taxes have been taken out of an employee's pay.[8]
Reimbursements
Payroll components may include reimbursements for some expenses that an employee bears on behalf of the company. In many cases this helps an employee save taxes. An employee typically has to submit some bills to validate the actual amounts. This has to then be approved typically by their manager and finance team. Some common reimbursement components in Indian Payroll include Telephone Bills, Driver Salary, Fuel Reimbursements etc.[9]
A wage garnishment is a court-ordered method of collecting overdue debts that require employers to withhold money from employee wages and then send it directly to the creditor.[12] Wage garnishments are post-tax deductions, meaning that these mandatory withholdings do not lower an employee's taxable income.[13] Unpaid debts that may result in wage garnishments include credit card bills and medical bills, child support and alimony, federal student loans, and tax levies. Each of these garnishments may have different limit on the amount that may be deducted.[14]
Net pay
Net pay is the total amount that an employee receives after all required and voluntary deductions are taken out.[15]
Outsourcing
Businesses may decide to outsource their payroll functions to an outsourcing service like a Payroll service bureau or a fully managed payroll service. These can normally reduce the costs involved in having payroll trained employees in-house as well as the costs of systems and software needed to process a payroll. Where this may reduce the cost for some companies many will foot a bigger bill to outsource their payroll if they have a specially designed payroll program or payouts for their employees.[citation needed][16] In many countries, business payrolls are complicated in that taxes must be filed consistently and accurately to applicable regulatory agencies. For example, restaurant payrolls which typically include tip calculations, deductions, garnishments, and other variables, can be difficult to manage especially for new or small business owners. Another reason is that company leaders do not have the time to payroll work.[17]
In the UK, payroll bureaus will deal with all HM Revenue & Customs inquiries and deal with employee's queries. Payroll bureaus also produce reports for the businesses' account department and payslips for the employees and can also make the payments to the employees if required. As of 6 April 2016, umbrella companies are no longer able to offset travel and subsistence expenses and if they do, they will be deemed liable to reimburse HMRC any tax relief obtained. Furthermore, recruitment companies and clients may be potentially liable for the unpaid tax.[18]
Another reason many businesses outsource is because of the ever-increasing complexity of payroll legislation. Annual changes in tax codes, Pay as you earn (PAYE) and National Insurance bands, as well as statutory payments and deductions having to go through the payroll, often mean there is a lot to keep abreast of to maintain compliance with the current legislation.
On the other hand, businesses may also decide to utilize payroll software to supplement the efforts of a payroll accountant or office instead of hiring more payroll specialists and outsourcing a payroll company. Payroll software bases its calculation on entered rate, approved data obtained from other integrated tools like the electronic Bundy clock, and other essential digital HR tools.
References
^"Definition of PAYROLL". www.merriam-webster.com. Retrieved 2019-11-04.
^Bragg, Steven M. (2003). Essentials of Payroll: Management and Accounting. John Wiley & Sons. ISBN0471456144. Retrieved 4 November 2017.
^Culp, Marilyn E.; Lindquist, Deanna R.; Williams, Chaton T.; Lee, Tamila V.; Rice, Charles M. (Spring 2000). "A guide through the garnishment jungle" (PDF). Employment Relations Today. John Wiley & Sons: 121.[dead link]
^Heathfield, Susan M. "The Difference Between Gross Pay and Net Pay". The Balance Careers. Retrieved 2019-12-03.
^"Miért fontos a bérszámfejtés, és mivel foglalkozik a bérszámfejtő? • Ertl Mónika" (in Hungarian). 2022-02-17. Retrieved 2022-04-28.
^"All change for Umbrella Companies from April 2016". FCSA. The Freelancer & Contractor Services Association. 22 December 2015. Retrieved 4 November 2017.
External links
Wikimedia Commons has media related to Payroll.
Look up payroll in Wiktionary, the free dictionary.
payroll, financial, firms, service, bureau, 1959, novel, novel, 1961, film, film, examples, perspective, this, article, deal, primarily, with, united, states, represent, worldwide, view, subject, improve, this, article, discuss, issue, talk, page, create, arti. For financial firms see Payroll service bureau For the 1959 novel see Payroll novel For the 1961 film see Payroll film The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject You may improve this article discuss the issue on the talk page or create a new article as appropriate October 2021 Learn how and when to remove this template message A payroll is the list of employees of some company that is entitled to receive payments as well as other work benefits and the amounts that each should receive 1 Along with the amounts that each employee should receive for time worked or tasks performed payroll can also refer to a company s records of payments that were previously made to employees including salaries and wages bonuses and withheld taxes 2 or the company s department that deals with compensation A company may handle all aspects of the payroll process in house or can outsource aspects to a payroll processing company Handling payroll typically involves sending out payslips to employees Payroll in the U S is subject to federal state and local regulations including employee exemptions record keeping and tax requirements 3 Contents 1 Frequency 2 Components 2 1 Gross pay 2 2 Deductions 2 3 Reimbursements 2 4 Taxes 2 5 Wage garnishments 2 6 Net pay 3 Outsourcing 4 References 5 External linksFrequency EditCompanies typically process payroll at regular intervals This interval varies from company to company and may differ within the company for different types of employee According to research conducted in February 2022 by the U S Department of Labor and the Bureau of Labor Statistics the four most common pay frequencies in the United States were 4 Weekly 31 8 Fifty two 40 hour pay periods per year and include one 40 hour work week for overtime calculations Biweekly 45 7 Twenty six 80 hour pay periods per year consisting of two 40 hour work weeks for overtime calculations Semi monthly 18 0 Twenty four pay periods per year with two pay dates per month Compensation is commonly paid on either the 1st and the 15th day of the month or the 15th and the last day of the month and consists of 86 67 hours per pay period Monthly 4 4 Twelve pay periods per year with a monthly payment date Each monthly payroll consists of 173 33 hours This frequency changes based on the establishment size or the maximum number of employees within the business over the previous 12 months 4 Frequency of pay periods by size class in the CES survey February 2022 Size Weekly Biweekly Semimonthly Monthly1 9 31 1 36 0 23 0 10 0 10 19 33 4 45 9 20 1 0 6 20 49 40 5 44 1 13 4 2 1 50 99 29 7 54 4 14 7 1 2 100 249 29 3 56 4 12 8 1 5 250 499 23 8 64 0 12 0 0 3 500 999 22 8 63 9 12 8 0 5 1000 21 6 67 6 9 8 0 9 Components EditGross pay Edit Gross pay also known as gross income is the total payment that an employee earns before any deductions or taxes are taken out 5 For employees that are hourly gross pay is calculated when the rate of hourly pay is multiplied by the total number of regular hours worked If the employee has overtime hours these are multiplied by the overtime rate of pay and the two amounts are added together 6 Also included in gross pay is any other type of earnings that an employee may have These may include holiday pay vacation or sick pay bonuses and any miscellaneous pay that the employee may receive Deductions Edit There are a wide array of voluntary deductions that can be taken out of an employee s gross pay some of which are taken out before taxes and some being taken out after taxes Pre tax deductions are deductions that are taken out of an employee s gross pay amount before it is subject to tax 7 and could include health dental or life insurance deductions for certain retirement accounts or deductions for FSA or HSA accounts After tax deductions are deductions that are occur after taxes have been taken out of an employee s pay 8 Reimbursements Edit Payroll components may include reimbursements for some expenses that an employee bears on behalf of the company In many cases this helps an employee save taxes An employee typically has to submit some bills to validate the actual amounts This has to then be approved typically by their manager and finance team Some common reimbursement components in Indian Payroll include Telephone Bills Driver Salary Fuel Reimbursements etc 9 Taxes Edit Various levels of government require employers to withhold various types of income tax and payroll tax 10 In the United States payroll taxes are used to support Social Security and Medicare costs while income taxes are used for other federal and state programs 11 Wage garnishments Edit A wage garnishment is a court ordered method of collecting overdue debts that require employers to withhold money from employee wages and then send it directly to the creditor 12 Wage garnishments are post tax deductions meaning that these mandatory withholdings do not lower an employee s taxable income 13 Unpaid debts that may result in wage garnishments include credit card bills and medical bills child support and alimony federal student loans and tax levies Each of these garnishments may have different limit on the amount that may be deducted 14 Net pay Edit Net pay is the total amount that an employee receives after all required and voluntary deductions are taken out 15 Outsourcing EditBusinesses may decide to outsource their payroll functions to an outsourcing service like a Payroll service bureau or a fully managed payroll service These can normally reduce the costs involved in having payroll trained employees in house as well as the costs of systems and software needed to process a payroll Where this may reduce the cost for some companies many will foot a bigger bill to outsource their payroll if they have a specially designed payroll program or payouts for their employees citation needed 16 In many countries business payrolls are complicated in that taxes must be filed consistently and accurately to applicable regulatory agencies For example restaurant payrolls which typically include tip calculations deductions garnishments and other variables can be difficult to manage especially for new or small business owners Another reason is that company leaders do not have the time to payroll work 17 In the UK payroll bureaus will deal with all HM Revenue amp Customs inquiries and deal with employee s queries Payroll bureaus also produce reports for the businesses account department and payslips for the employees and can also make the payments to the employees if required As of 6 April 2016 umbrella companies are no longer able to offset travel and subsistence expenses and if they do they will be deemed liable to reimburse HMRC any tax relief obtained Furthermore recruitment companies and clients may be potentially liable for the unpaid tax 18 Another reason many businesses outsource is because of the ever increasing complexity of payroll legislation Annual changes in tax codes Pay as you earn PAYE and National Insurance bands as well as statutory payments and deductions having to go through the payroll often mean there is a lot to keep abreast of to maintain compliance with the current legislation On the other hand businesses may also decide to utilize payroll software to supplement the efforts of a payroll accountant or office instead of hiring more payroll specialists and outsourcing a payroll company Payroll software bases its calculation on entered rate approved data obtained from other integrated tools like the electronic Bundy clock and other essential digital HR tools References Edit Definition of PAYROLL www merriam webster com Retrieved 2019 11 04 Bragg Steven M 2003 Essentials of Payroll Management and Accounting John Wiley amp Sons ISBN 0471456144 Retrieved 4 November 2017 Employee Payroll Laws smallbusiness chron com Retrieved 2019 11 05 a b Length of pay periods in the Current Employment Statistics survey www bls gov Retrieved 2022 12 23 Which of your friends needs to learn this term BusinessDictionary com Archived from the original on 2019 11 09 Retrieved 2019 11 09 Murray Jean How to Calculate Gross Pay for All of Your Employees The Balance Small Business Retrieved 2019 11 14 GAP 101 4 Payroll Deductions Duke Financial Services Accounting Duke University Retrieved 11 October 2021 Hawkins Jim 2017 Earned Wage Access and the End of Payday Lending Boston University Law Journal 101 705 Employees Benefits allowable incometaxindia gov in Retrieved 2022 11 10 Income Tax vs Payroll Tax Top 5 Differences with infographics Wallstreet Mojo 2018 06 16 Retrieved 2019 11 05 Watson Catie November 29 2018 What Is the Difference Between Payroll Tax amp Income Tax budgeting thenest com Retrieved 2019 11 07 Jablonski James A 1967 Wage Garnishment as a Collection Device Wisconsin Law Review 759 Catherine Sylvain Yannelis Constantine December 2020 The Distributional Effects of Student Loan Forgiveness w28175 doi 10 3386 w28175 S2CID 229448445 a href Template Cite journal html title Template Cite journal cite journal a Cite journal requires journal help Culp Marilyn E Lindquist Deanna R Williams Chaton T Lee Tamila V Rice Charles M Spring 2000 A guide through the garnishment jungle PDF Employment Relations Today John Wiley amp Sons 121 dead link Heathfield Susan M The Difference Between Gross Pay and Net Pay The Balance Careers Retrieved 2019 12 03 Anna Beatrice April 2022 Payroll software in Singapore QuickHR a href Template Cite web html title Template Cite web cite web a CS1 maint url status link Miert fontos a berszamfejtes es mivel foglalkozik a berszamfejto Ertl Monika in Hungarian 2022 02 17 Retrieved 2022 04 28 All change for Umbrella Companies from April 2016 FCSA The Freelancer amp Contractor Services Association 22 December 2015 Retrieved 4 November 2017 External links Edit Wikimedia Commons has media related to Payroll Look up payroll in Wiktionary the free dictionary IRS Publication 15 2010 Circular E Employer s Tax Guide United States Bureau of Labor Statistics Retrieved from https en wikipedia org w index php title Payroll amp oldid 1140576084, wikipedia, wiki, book, books, library,
