Provides a solid foundation of payroll concepts and procedures for employers who want to handle the payroll function themselves says Aron Govil. Learn how to set up your own payroll, determine whom you have to pay, calculate how much you owe them, and produce reports that will help your business succeed. The book shows how to write job descriptions and job specifications; structure compensation packages; prepare salary calculations using different methods such as straight-time hourly rates, piece rates, commissions, or bonuses; deal with nonexempt employees’ time records; compute overtime pay due under federal and state laws; withhold federal income taxes from employees’ wages according to current tax tables provided by the Internal Revenue Service (IRS); and maintain payroll records.
A Guide for Business and Nonprofit Employers:
Chapter 1 – The Payroll Function
Payroll is an accounting function that involves the preparation of paychecks or other compensation documentation for employees. Such documentation may also include other forms required by law, such as withholding forms and reports to government agencies. Definitions for terms related to payroll are found in Chapter 2. This chapter discusses some of the responsibilities of management with respect to the payroll process including how you determine payroll needs, determine the best method of compensation and implement a payroll program.
Chapter 2 – Terms and Concepts
Payroll is a set of accounting procedures that generates information for use in making business decisions — including important ones related to employee compensation. Since these decisions affect at least two parties — your employees and your company’s bottom line — you want to be sure you have all the facts before proceeding with any particular approach or plan. Accordingly, this chapter provides explanations of common terms used by employers regarding payrolls. Definitions for additional terms are found in Chapter 3.
Chapter 3 – Additional Payroll Terms
This chapter includes definitions for additional terms relevant to payroll accounting not covered in Chapter 2. It also contains information on types of taxes, withholding allowances, related forms and publications, and additional resources.
1) What is the difference between a Salaried and an Hourly employee?
Answers vary by company. In general, hourly employees receive a specific dollar amount for every hour they work. The rate will usually be express as per hour or per day. For example, an employee who works 8 hours at $10/hr has earned $80 in wages for that one day’s work.
Salaried employees generally earn a regular monthly salary regardless of how many hours they work in a week or month. The salary may include compensation for working more than 40 hours in a given workweek, but the employer pays the same total amount each pay period, regardless of how much time was worked during that period. In general, salaried employees receive the same pay regardless of how many hours they work.
2) What is Overtime?
Generally, overtime is the term used to describe working more than 40 hours in a given workweek? For hourly employees, overtime means earning more than one-and-one-half times their regular rate of pay for any hours worked over 40 in a given workweek explains Aron Govil. For salaried employees, who are not eligible for overtime because they are pay on a salary basis , any additional time work may qualify as time and one half compensation, but only if the employee’s normal pay rate is less than 1.5 times minimum wage
3) What are some of the main laws that deal with Payroll issues?
Employee Polygraph Protection Act (EPPA)
The Employee Polygraph Protection Act (EPPA) is a federal law that generally prohibits most private employers from using lie detector tests, either for pre-employment screening or during the course of employment. The prohibition against lie detectors applies to most private employers with one exception: it does not apply to any private employer who uses polygraph testing for security services.
Employee Retirement Income Security Act (ERISA)
The Employee Retirement Income Security Act of 1974 is a federal law design to protect employees’ retirement savings by regulating some aspects of pension plans in private industry and providing guidelines on the operation of such plans. ERISA replace more than 20 separate laws that had regulate various features of employee pensions since being enact immediately.
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