Chapter 12 Chapter 12

Preparing Payroll Time Cards

2

L

12-1 Paying Employees12-1 Paying Employeespage 341

Money paid for employee services is called a salary.

The period covered by a salary payment is called a pay period.

The total amount earned by all employees for a pay period is called payroll.

A payroll system mustinclude an accurate record of the time each employee has worked.

Hobby Shack uses a time card.

3

L

4. Add the Hours column.

CALCULATING EMPLOYEE HOURS WORKEDCALCULATING EMPLOYEE HOURS WORKEDpage 342

11

22

3344

3. Add Hours Reg and Hours OT columns and enter the totals.

2. Calculate the number of overtime hours and enter the amounts.

1. Calculate the number of regular hours for each day and enter the amounts.

4

L

CALCULATING EMPLOYEE TOTAL EARNINGSCALCULATING EMPLOYEE TOTAL EARNINGSpage 343

33

1122

4455

1. Enter the rate for regular time in the Rate column.

2. Calculate the regular earnings. Enter the amount.

3. Enter the rate for overtime.

4. Calculate the overtime earnings. Enter the amount.

5. Add the Amount column to calculate total earnings. Enter the amount of total earnings.

LESSON 12-2 LESSON 12-2 Determining Payroll Tax WithholdingDetermining Payroll Tax Withholding

Payroll Taxes are taxes based on the payroll of a business.

•A business is required by law to withhold certain payroll taxes from employees salaries.

•All payroll taxes are based on employee total earnings.

•If payroll is reported incorrectly the business could be charged a state or federal penalty.

•Payroll taxes withheld represent a liability for the employer untilpayment is made to the government.

6

L

EMPLOYEE’S WITHHOLDING EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATEALLOWANCE CERTIFICATE

11

2233

44

55

page 346

1. Write the employee’s name and address2. Write the employee’s social security #.3. Check the appropriate marital status block.4. Write the total # of withholding allowances claimed.5. The employee signs and dates the form.

The info from the W4is used to determine the amount of income tax to be withheld from employee pay.-Marital Status-Withholding Allowances

(dependents)

Employers are required to have a Form W-4 on file for each employee.

7

L

EMPLOYEE’S INCOME TAX EMPLOYEE’S INCOME TAX WITHHOLDING – MARRIED PERSONSWITHHOLDING – MARRIED PERSONS page 348

11

22 33

1. Select the appropriate table.

2. Locate the employee’s total earnings.

3. Intersection of wages and number of allowances column.

8

L

Social Security & Medicare TaxSocial Security & Medicare Tax

FICA - Federal Insurance Contribution Act provides for old-age, Survivors, disability, and hospital Insurance.

Social Security - old age, survivor, & disability6.2% of earnings up to $87,000 tax base.

Medicare - hospital insurance1.45% of total earnings - no maximum.

9

L

12-3 PAYROLL REGISTER12-3 PAYROLL REGISTER

7788 99 1010 1111

1212

page 351

11 22

33 44 55 66

1313

8. Health insurance premium deductions2. Payment date

3. Employee personal data9. Other employee payroll deductions

4. Earnings10. Total deductions

5. Federal income tax withheld11. Net pay

6. Social security tax withheld12. Total, prove, and rule

7. Medicare tax withheld13. Check number

1. Pay period date

A Business form used to record payroll information is a payroll register.

Total Earnings (3) - Total Deductions (10) = Net Pay (11)

10

L

EMPLOYEE EARNINGS RECORDSEMPLOYEE EARNINGS RECORDSpage 353

7. Total and prove

5. Earnings, deductions, net pay

2. Employee personal data

11

1. Last day of quarter

4. Pay period

3. Beginning accumulated earnings

6. Updated accumulated earnings

44

22

77

66

33

55

Employee earning records are used to record detailsaffecting payments made to an employee.

11

L

12-4 Preparing Payroll Checks12-4 Preparing Payroll Checks

1. Prepare the check stub.

page 356

2. Prepare the check.

11 22

A check for the total amount of net pay is written with a check fromThe General Account and deposited into the Payroll Account.

12

L

EMPLOYEE’S PAYROLL CHECKEMPLOYEE’S PAYROLL CHECKpage 357

1. Prepare the check stub of each employee’s payroll check.2. Prepare each employee’s payroll check.

2211

From the Payroll Account you prepare employee checks with information provided in the Payroll Register.