What is Payroll?

Payroll is a process that comprises every employee of a company who gets their regular salaries or other compensation under that system. Some employees may be receiving steady salary, but some might be paid on hourly basis or other ways. However, the process is that every payment methods are well calculated by a payroll Payrollspecialist after which the precise paychecks are provided. Many companies use objective measuring tools including timecards or timesheets to determine the payroll due each pay period.

It is the job of a payroll accountant who calculates the salaries of every employee in the company and evaluating the gross income amount which is either entered in the computer program or into a calculator for further calculations. There are several regular deductions applicable in the salary such as FICA (social security), tax withholdings, union dues, medical insurance, charitable contributions, and others. It becomes easier when payroll software is used. After deductions, the remaining balance comes out as net wage which is then converted to a check and paid to the employee for that particular time period for say a month. Payroll departments also has to identify the employees and employer with the help of federal code and keep a running tally on total income/deductions for the financial year.

Payroll Tax

Small businesses prefer keeping their payroll obligations low until the time comes when the company starts gaining profits. Even if the business does not get profit, the employees get their compensation for their services.  Many companies also hire outside accountants to perform all the calculations of a payroll system as the records are based on federal tax forms, timecards and others.

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