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Unit 6Unit 6

Payroll Register Payroll Register

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• Percentage Method: – Occasionally an employee earns wages that are not

shown on the wage-bracket tables. In these cases, the percentage method is used.

– Federal Income Tax withholding calculations include: • number of allowances for the period • payroll period• marital status• gross earnings

Using the Percentage Method

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• Percentage Method tables:

Using the Percentage Method

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Percentage method Example:• Henry Biddle is married and list two withholdings allowances

for the weekly pay period. His earnings were $ 1,410.40. How much should you withhold for Federal Income tax?

Using the Percentage Method

Step #1 - The first steps to computing his withholdings, is to determine the amount of earnings on which to compute withholding tax. $59.62 x 2 = $119.24

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Step #2 –Subtract total allowances ($119.24) from total earnings ($1,410.40) to get the amount ($1,291.16) on which his withholding tax is computed for the week.

Using the Percentage Method

Step #3 – Determine the amount of income tax to withhold:using the table Mr. Biddle must pay $149.90 plus 25% of excess earnings over $1,245.

($1291.16–$1,245) x .25 + $149.90 = 161.44

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• The payroll register provides:– a summary of the hours worked, earnings,

deductions, and net pay of all employees for a payroll period.

– Beginning and ending dates for the payroll period

– Information for each employee – Totals for the period

Payroll Register

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Payroll Register

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Payroll Register

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The first section of the payroll register shows:

― the name,― marital status, ― number of withholding

allowances, ― and the regular pay rate

Payroll Register- Employee Information

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Employee Hours:― Enter the regular hours― Enter the overtime hours

Payroll Register- Employee Hours

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Entering employee’s earnings for the period.– These amounts are

transferred from the time cards to the earnings section of the payroll register.

– Some workers such as independent contractor’s are not listed in the payroll register.

Payroll Register - Earnings

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Mandatory Deductions― Social Security ― Medicare ― Income Tax

withholdings― State Income Tax

withholding

― Garnishments

Payroll Register – Deductions

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Voluntary Deductions― The amounts of voluntary

deductions are obtained from the Employee Earnings Records.

• Union dues• Health insurance • 401 K retirement plan • Simple IRA • Stock options plan

Payroll Register – Deductions

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Net pay – The net pay is found by

subtracting the employee’s total deductions from his/her total (gross) earnings.

– The date and check number columns are left blank until the paychecks are prepared.

Payroll Register – Net Pay

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TOTALING AND PROVING THE PAYROLL REGISTER

Step # 2 After individual entriesare made, a single line is drawn across all moneycolumns at the bottomof the form.

Step # 1 After the informationfor all employees has been entered in the payroll register, it is necessary to totaland prove the record.

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TOTALING AND PROVING THE PAYROLL REGISTER

Step # 4 Once totals are checked and the figures are enteredin the payroll register,a double line is drawn under them.

Step # 3 The amounts in each column is added to find the totals.

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Steps to prove the payroll register:

― Add the total regular earnings.

― Add the total over time earnings.

― Add the totals of each deduction column.

― Subtract the total amount of Total Deductions from the Total Earnings Column

― Computation= Net Pay .

Proving the Payroll Register

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Accuracy checks in the Payroll: • Be careful not to transpose

numbers • Add figures twice - once in each

direction • If subtracting, check the difference

by using addition.

Accuracy in Payroll

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Payroll Register

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Payroll Register

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Unit Summary

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Questions?