|You should realize by now, that
there's a lot more to Payroll than just multiplying, adding, and
What Did We
The Introduction provided
an overview of payroll, employees, and your requirements as a
Lesson 1 Types Of
Compensation discussed and explained that an employee's
compensation includes not only direct payments (salary and wages)
but also indirect benefits known as fringe benefits or
Lesson 2 Types Of
Deductions discussed and explained the different types of
deductions that are taken from an employee's salary or wages such
as social security, medicare, federal and state income tax, and
other deductions such as health insurance and retirement
Lesson 3 Calculating
Payroll used a fictitious company called Mom's Secret Recipes
to illustrate what calculations are needed and how to do them in
order to correctly calculate and pay your employees.
Lesson 4 Payroll Taxes and
Withholdings discussed and reviewed how an employer reports and
deposits amounts deducted from their employees' wages and salaries
and also how an employer is required to "match" amounts deducted
for social security and medicare.
Lesson 5 Payroll Records
illustrated and discussed the records needed by employers to
properly document and record their employee's wages and salaries
and deductions taken.
Lesson 6 Self Employed
reviewed and explained what self employment tax is, who is required
to pay this tax, and how to properly calculate, report, and deposit
Lesson 7 Government
Regulations presented a brief overview of the federal and state
laws, rules, and regulations that you as a business owner or
manager need to be aware of.
||What should we now know or at least be
familiar with ?
- How to determine whether an
Employer Identification Number is needed and how to
- Who is and is not classified as
an employee. Remember owner's of most "flow thru" types of
organizations are not considered as employees, but are classified
- What you need to do when hiring
employees (steps to take).
- How to classify your employees as
exempt or nonexempt when required.
- Employee compensation includes
not only direct payments made to employees for work performed but
also any benefits indirectly paid on behalf of the employee. The
employee's compensation includes not only cash paid to employees
but basically anything of value.
- As a general rule all types of
compensation paid directly or indirectly to an employee is subject
to withholding and employment taxes.
- The IRS does allow an
employer to provide some benefits that do provide
favorable tax treatment to the business as well as to the
individual. In other words, the employer can deduct the expense and
the employee doesn't have to include the compensation in his/her
- How we grouped an employee's
total compensation into four categories:
- Employer Provided
- Benefits Provided By
- How fringe benefits (perks) help
attract qualified employees.
- Why it's a good practice to have
signed authorizations for deductions taken from an employees
- How we classified deductions from
pay into three categories:
- Deductions Required by
- Deductions for the Employer's
- Deductions for the Employee's
- You can establish different pay
periods for different employee job categories.
- You can have different methods of
calculating pay for different employee job categories.
- That salaries are compensation
based on a fixed amount and paid to an employee for management,
professional, administrative, or similar services (exempt type of
jobs). That it is usually stated in terms of a weekly, monthly, or
yearly amount. Although salaries are normally used to pay for the
so called exempt types of jobs, they may also be used as the
payment method for skilled or unskilled employees in non management
or supervisory jobs , the so called nonexempt types of jobs. With a
"true" salaried position the employee is paid the same amount
regardless of how many hours the employee actually works during the
- When an employer must pay
overtime and how to properly calculate the amount.
- Tipped Employees are subject to
special rules and laws.
- What a tip credit is and how it's
used with employees that receive tips as a portion of their
- All nonexempt employees must be
paid overtime for all hours worked in excess of 40 hours during a
- Only actual hours worked are used
in calculating overtime.
- We used the following methods of
calculating our employee's earnings - hourly rate ,hourly rate +
tips, piece rate, sales commission rate, salary for exempt, salary
for nonexempt, and additional bonuses for some of our employees
which illustrate that an employees earnings may be calculated using
different agreed upon methods.
- Although an employer and employee
may agree on any method they want to calculate an employee's
earnings, the employer must pay at least the minimum wage
for the actual hours worked and must also pay overtime for any
hours worked over 40 during a week for all nonexempt
- Bonuses, shift payments, and
other compensation are normally included in calculating an
employee's straight time and overtime rates.
- A salaried employees earnings may
be based on more than a 40 hour work week.
- That the employee's rate
calculation includes other compensation in addition to the
employee's base rate of pay. The employee's actual calculated rate
may vary week to week depending on what compensation they
earned during the period.
- Discussed and determined that
some deductions might require you to seek professional help and
- Learned that some deductions
called pre tax receive favorable tax treatment
- IRS publications provide
employers with tables and methods to aid in calculating social
security, medicare, and amounts of income tax to withhold from
employee's salaries and wages.
- Most states have a state income
tax and require employers to withhold (deduct) estimated amounts
for state employee income tax. The states provide tables and
methods similar to the IRS tables and methods for calculating the
- How to determine when and how to
deposit payroll taxes and withholdings.
- Forms used to report and/or
calculate payroll taxes and withholdings and federal and state
- What records are needed for a
- Who is subject to self employment
- How to calculate and report the
self employment tax.
- Familiarity with the government
laws, rules, and regulations that affect employers.
- How good Payroll Software
makes the task of handling payroll more manageable.
Where to go for my recommended pick. PayWindow provided by ZPay
Payroll Systems, Inc. is software that really is simple to
use. Not free but close. Very reasonably priced at only
To evaluate a free fully
functioning trial version:
PayWindow to download your Free Fully
Functioning trial version of PayWindow and take it for a test
The trial version provides you 30
days to see if this might be an answer to one of your prayers. I
know, if you're like me, you'd probably like to have more than 30
days, but you and I both know if we don't procrastinate that 30
days is more than an ample amount of time to make a decision.
||One last task. Bet you thought
you were going to "skate" in this tutorial and not get tested,
right ? Wrong ! See what you picked up and what you now know about
- Fling The Teacher Game
The object of my Fling The Teacher Bookkeeping and Accounting Games
is to build a trebuchet by correctly answering 15 questions. If you
can get it completely built, you can get rid of me (at least for a
little while) by using the catapult to fling me away. A trebuchet,
for those like me that didn't know, is a catapult or type of
medieval artillery used during sieges.
The object of my Basketball Bookkeeping and Accounting Games is to
test your 3-point shooting skills in addition to testing your basic
bookkeeping and accounting knowledge.
- Walk The Plank
The object of my Walk The Plank Bookkeeping and Accounting Games is
to feed me to the sharks by making me walk the plank. You
accomplish this by answering bookkeeping and accounting questions
||Congratulations, we're done ! You
started out as a baby and hopefully you ended up as a mature adult.
Your introduction into the world of Payroll has provided you with a
good foundation for you to build on. At the very least, you should
now be familiar with some terminology, forms, and regulations that
affect you as an employer and where to go for sources of
||If you benefited from my
tutorial, consider purchasing an E-book or CD version of my
tutorials. Your support makes it possible for me to continue to
develop and add additional new tutorials to my Bean Counter
E-book or CD Versions
Once Again Your Humble Tutor
Cartoons in this tutorial
provided by Ron Leishman. If you enjoyed them, get some of your own