BK Payroll

So, you
Bookke
Payroll
Introduct
This tutorial
bookkeeping
to provide an
calculations t
with. No, wh
required to h
references (l
detailed listin
connected to
benefits you
Note: Some
references (l
If you don't h
Adobe Reade
http://www.a
Tutorial N
A menu of al
allow you to
What's Co
Note: Note:
Although the
use the old m
rate, are all s
1
This Introdu
Lesson 1 Ty
only direct pa
Lesson 2 Ty
an employee
deductions su
Lesson 3 Ca
calculations a
Lesson 4 Pa
amounts ded
amounts ded
Lesson 5 Pa
and record th
Lesson 6 Se
and how to p
Lesson 7 Go
regulations t
Lesson 8 W
As mentioned
detailed infor
Introduc
Many busine
often starts o
planning, pur
chief with no
Some not on
employees. T
providing the
On the other
business gro
help. The add
services. If th
government
All U.S. busin

identification
social securit
2
is issued by t
companies, a
When Do Yo
 If you
 If you
 If you
an LL
propr
 If you
 Emplo
 Excise
 Alcoh
If you meet a
obtaining you
requirements
identification
If you need a
Employer Ide
number on li
http://www.i
Who Are Em
According to
common-law
classified as
Let's first loo
 Indep
Exam
indep
individ
individ
mean
indep
 Statu
By law
agent
Well we brief
 Comm
In gen
treate
3
 Statu
By law
guide
In summary,
additional de
contractor ru
provide deta
What Do I N
 Of cou
wages
need
deduc
 Deter
You n
 Week
 Semi-
 Bi-Mo
 Month
 Annua
Note: You ca
your salaried
 You s
unem
and u
period
period
out U
http:/
 Obtain
suffer
 Deter
Labor
 http:/
 http:/
 Check
busin
http:/
 Deter
Depar
your s
4
 http:/
 http:/
 http:/
 Deter
and re
 Repor
down
 Fill ou
used
clickE
check
 http:/
 http:/
 Have
inform
wages
exem
to wit
http:/
 Any e
5. As
emplo
form
http:/
Classifying
Exempt / N
The Fair Labo

business a ye
commerce or
communicati
employees o
domestic wor
The Act (FLS

full-time and
The FLSA req

set out by th
you have to
Note:State's
(rules) are m
5
labor laws. F
$5.15 , you h
Basically to q
exempt job d
basis is none
automatically
An employee
What does "e

The term use
when used in
FLSA, it mea
and the emp
employee ma
What does "n

Nonexempt i
determined t
all of the FLS
provided by t
If you want t
not paid a sa
as stated ear
The lesson co
sites that pro
Lesson 1
Types Of Compensation
Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson 5 Lesson 6 Lesson 7 Lesson 8
6
med but also any benefits indirectly paid on behalf of the employee. The employee's compensation includes not only cash p
to withholding and employment taxes. The IRS does allow an employer to provide some benefits that do provide favor
earnings.
ype of business organization (sole proprietorship, partnership, LLC, or corporation) may affect the tax treatment of some b
services they provide. Common types of regular compensation are:
nt, professional, administrative, or similar services (exempt type of jobs). A salary is usually stated in terms of a weekly,
lled employees in non management or supervisory jobs , the so called nonexempt types of jobs. With a "true" salaried po
d employees.
mount per sale or as a percentage of each sale. Most commissions are related to selling positions.
mally overtime is paid for all hours worked over 40 in a weekly period. The extra hours are paid at time and a half or in som
. The government has rules and regulations that apply to this type of compensation.
ees would normally prefer not to work. An example would be paying an extra 50 cents an hour to employees who work the
changeably when discussing pay. In addition, when someone asks the question "what do you make ?" , the answer given n
s determined by the employer or as a customary practice of the industry.
he business may have a policy of automatically adding a percentage of the total customer's bill to his/her bill.
some company set goals. Normally, but not necessarily, reserved for management type employees. The employer dete
ses and profit sharing payments depends on the rules and policies governing the bonus or profit sharing plan.
owever, they are a major cost for most employers (businesses). They can easily amount to 25-30% of an employee's reg
7
mployees is a constant challenge. Many businesses "fool" themselves by adopting a philosophy of I don't have to offer mu
y is used for jobs that require some skill or training provided by your company, you may need to change your philosophy.
s, a business would be wise to investigate and at least offer benefits similar to other businesses in their industry or profes
oyee is normally allowed so many days off with pay during the year usually based on their length of service (how long the
usinesses may require all the employees to take vacation at the same time.
e days off can be with or without pay. Normally, the employee gets paid for the holiday after working for the business for a
octor or dentist appointment, military obligations, etc. This benefit can be with or without pay. Normally sick and personal
amily for medical expenses when a person is sick or injured. The employer can cover the full cost or require the employee
ployee or surviving family if the employee dies or becomes disabled. The IRS has some special rules related to this type o
ans may or may not require the business (employer) to contribute to the plan. Most retirement plans are required to follow
more and more small businesses are starting to provide these benefits to their employees. In addition, the laws, rules, and
non-taxable (qualified) benefits. The IRS has guidelines on what benefits may be offered using these plans.
to their employees or the resulting tax effects. For an in depth discussion of these and the prior benefits I discussed, refe
butions.
suffered on the job. Only the employer is required to contribute premiums for this coverage. State and federal regulations
8
uring times when they are not employed. The employer is normally required by law to make payments not only to their sta
-time.
edicare deductions are and what they do and don't provide to covered employees. Basically, social security deductions (FIC
ay for FICA(Federal Insurance Contribution Act) and Medicare taxes. The employer is required to pay the same amount a
ect to special IRS rules pertaining to social security and medicare (Lesson 6 discusses these rules).
enefits:
reduced benefits available as early as 62) to anyone with enough Social Security credits.
y credits and who have a severe physical or mental impairment that prevents them from working or who have a condition
disabled and have low incomes and few resources.
s, other members of their family might qualify and receive benefits.
or older. Certain people younger than age 65 can qualify for Medicare, too, including those who have disabilities and those
. We'll call them Company A and Company B. We'll use the information and assumptions in the following table to base ou
Company A
$15.00
80 hours (2 weeks)
80 hours (10 days)
80 hours (10 days)
$4,200 annual premium paid
$600 annual premium paid
$3,000 annual contribution
mpany is offering the best deal.
Now let's total up our total annual compensation.

Description Company A Company B
Hourly Pay For Hours Worked During Year $27,600 $34,300
Vacation Pay 1,200 700
Holiday Pay 1,200 700
Sick Pay 1,200 700
9
Medical Premiums 4,200
Group Life Premium 600
Retirement Contribution 3,000
Total Compensation $39,000 $36,400
ny A. Fringe Benefits made a big difference.
uman Resources.
t it once was and may just be the edge you need to keep your good employees. Most mutual fund companies, brokerage f
D. This extract (with updates) contains information useful in choosing an appropriate retirement plan.
k. What's more, there are a number of retirement programs that provide tax advantages for both employers and employe
10
ackage" is made up of more than just their regular salary and wages. I grouped employee compensation into four main c
we'll learn that some benefits receive favorable income tax treatment. So far so good ( I hope) , so we'll move right along
An employee's pay is one area of a business that has no tolerance for errors. Not only must you properly
calculate the employees earnings but also properly calculate all the deductions that apply to your employee's
earnings. What many employers may not realize is that federal and state laws may apply to what and how
much can be deducted from an employee's pay.
Although not always required by law, a good practice is to have a "blanket" signed authorization form
from all your employees authorizing what deductions may be taken from their pay and the circumstances that
"trigger" the deduction. In addition, all new hires should not only sign the "blanket" deduction authorization
but be given an oral briefing about your policy and have a chance to clear up any questions or
misunderstandings right from the start. In addition to your "blanket" authorization, you should also have
specific authorization forms for the different types of deductions initiating and terminating any deduction. An
example of a specific deduction form would be one authorizing the employer to deduct the employee's share
of medical insurance from their pay including the starting or ending dates. Of course, you would want these
forms also signed by your employees.
For employers that offer and provide a lot of fringe benefits to their employees, many of the deductions from
an employee's wages are directly related to the fringe benefits. In many cases, the employer pays a portion
of the cost and the employee also is required to pay a portion of the cost. The employee's portion of the cost
is normally deducted from their wages.
Deductions From Pay
 Basically deductions from pay can be classified into three categories:

 Deductions Required by Law
 Deductions for the Employer's Convenience
 Deductions for the Employee's Convenience
Required by law
 Social Security- mandatory "contributions" to the federal retirement system.

The Social Security deduction is calculated as the employee's gross earnings times 6.2%. For 2005,
incomes over $90,000 that have already had the maximum Social Security amount of
$5580.00withheld will not have any additional Social Security withholdings.
11
 Medicare- mandatory "contributions" to the federal medical system.
The Medicare deduction is calculated as the employee's gross earnings times 1.45%. Unlike Social
Security there is no annual limit to Medicare deductions.
 Income Tax Withholdings- pay as you go deductions for income tax.
The IRS supplies approved tables, methods, and instructions on calculating how much should be
deducted from an employee's pay.
 State Income Tax Withholdings- pay as you go deductions for state income tax.
Most but not all states have a state income tax. State taxing authorities supply approved tables,
methods, and instructions on calculating how much should be deducted from an employee's pay.
 Local Income Tax Withholdings- pay as you go deductions for local income tax.
Some but not all local governments have a local income tax. The local taxing authority supplies
approved tables, methods, and instructions on calculating how much should be deducted from an
employee's pay.
Note: Employees may authorize an additional amount that they want withheld from their pay for income,
state, or local taxes. Why would anyone do this ? Some people want to make sure that when they settle up
with the government agencies after the end of the year, they don't owe any additional money or are getting a
refund. In other cases, employees may have other sources of earnings on which no taxes are being withheld
and they use this extra withholding to cover the taxes on those earnings.
 Garnishments and Child Support- deductions to satisfy legal claims of others for unpaid obligations of
an employee.
Note: Special rules and calculations are required in order to determine the amount of the allowable
deduction.
 Tip Credits - allow an employer, when allowed by federal and state laws, to pay employee's in tip
related occupations less than minimum wage. The amount of the current tip "credit" is $3.02 which
allows an employer to only have to pay a direct wage rate of $2.13 per hour ($5.15 - 3.02).
Note:If your an employer in this type of industry consult the applicable federal and state labor laws.
Employer's Convenience
Be Careful on deductions that fall within this category. As a general rule, any deductions of this type can not
reduce the employee's gross pay below the minimum wage. Federal and/or State labor laws govern how
much if any can be deducted from an employee's pay. You may not try to "get around the law" by having the
employee reimburse the employer in cash for the cost of such items in lieu of deducting the cost from the
employee's wages. All the deductions below if authorized by the employee and they don't violate any federal
or state laws are normally an allowable deduction. The only employee's that you actually need to worry about
are your lower wage rate employees.
 Over payments- errors made in calculating employees wages. Although you'll normally be able to
deduct for over payment errors you need to exercise caution when the over payment is made to your
lower paid employees.
 Tools- required tools necessary for performing the employee's job.
 Uniforms- deductions for uniforms required by law or the employer and any related cleaning of the
uniforms.
 Shortages- deductions for cash or other shortages attributable to employees. In the restaurant and bar
business many employers also try to hold their employees accountable for customer walkouts (leave
without paying their bill).
 Breakage- deductions for merchandise damage attributable to improper or careless handling by
employees.
 Medical exam -deductions for employee medical exams required by employer or law.
 Drug test - deductions for drug test required by law or the employer.
 Employee theft - deductions for cash or merchandise shortages attributable to employees.
Common senses would dictate that if an employee stole from me, I should be able to recover the
amount from any pay that I owe to the employee. This is not always the case and you should probably
consult with an attorney prior to deducting any employee theft losses from their wages.
12
Employee's Convenience
 Insurance-the employee's share of Group Life and Medical & Dental insurance when the employer
does not cover 100 % of the premiums.
Warning:Care should be exercised and procedures set up to ensure that employee's who are
supposed to be covered are actually covered and that all premiums deducted along with any required
employer contributions are timely remitted to the insurance carriers so that the policy doesn't lapse
and you as an employer become liable for unpaid employee medical or insurance claims.
 Advances / Employee Loans- occasionally an employee may have an emergency and the employer
approves an advance and the employee authorizes his/her employer to deduct the advance or loan
from his/her wages.
Note: Although it's great for employers to help out employees during emergencies, the employer does
not want loans and advances to become the rule rather than the exception. It's probably wise to have
a policy governing what situations are eligible for an advance or loan.
 Retirement Plan- deductions for the employee's portion of contributions to employer sponsored
retirement plans.
 Union Dues - deductions approved by employees that provide for the payment of the employee's union
membership dues.
 Charity-United Way - authorized deductions by the employee that enable the employer to deduct and
forward specified amounts to the employee's choice of charities.
 Employee-Savings Accounts / U.S. Bonds - authorized deductions by the employee that enable the
employer to deduct a specified amount used to fund a savings account or purchase a bond on the
employee's behalf when the total accumulated deduction reaches the amount needed to purchase the
employee specified bond amount.
A few examples should help give you a better idea of some instances where you as an employer may want to
seek some professional guidance before deducting from an employee's pay. As stated earlier, normally the
determination of whether you as an employer can legally deduct an employer's convenience type item from
an employee's wages depends on whether the deduction will result in the employee being paid less than
minimum wage.
(1) A minimum wage employee working as a cashier is required by the employer to reimburse the employer
for a cash drawer shortage.
(2) An employer has a "policy" requiring tipped employees to pay for customers who walk out without paying
their bills.
(3) An employer requires minimum wage employees to have uniforms and deducts the cost of the uniforms
from their pay.
(4) An employee wrecks a company vehicle and the employer holds the employee responsible and deducts
the non-reimbursed cost of the repairs from the employee's wages resulting in wages paid below the
minimum wage.
(5) The cost of an employer-required physical examination or drug test cuts into an employee's minimum
wage or overtime compensation.
In addition, some deductions such as employee contributions to retirement and health insurance
plans are subject to special rules and may qualify for favorable tax treatment. We'll discuss this more in
Lesson 3 - Calculating Payroll.
13
This lesson classified the types of deductions into three major categories and also
illustrated that while most deductions are "straightforward", some deductions may at
times have some complicating factors thrown in and be subject to special rules.
It's still too early in this tutorial to fall asleep on me. On to our next lesson,
Calculating Payroll, where the calculations involving Types Of
Compensation (Lesson 1) and Types of Deductions (Lesson 2) are illustrated and
explained.
Lesson 3
Calculating Payroll
ns, we need to combine the two and throw in some additional concepts and practical examples to see how we actually per
gs. The gross pay minus the legal and authorized deductions is called net pay. Our examples will include the major types
ry to calculate the different types of payroll deductions. Additionally, we'll discuss any areas (earnings or deductions) whe
ng, that's exactly the approach we're going to take. We're going to use a restaurant (Mom's Secret Recipes) as our examp
the extra bit of knowledge won't hurt.
year.
flat rate of 10% of gross pay. Note:Actually states publish withholding tables and calculations similar to the IRS withhold
ertime laws.
per hour for covered, nonexempt employees. An employer of a tipped employee is only required to pay $2.13 ($5.15 -3.02
regularly receives more than $30 a month in tips. If an employee's tips combined with the employer's direct wages of at l
an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions which provide t
nd our state's minimum wage is the same as the federal minimum wage of $5.15. In addition, all our tipped employees co
ngs are not enough to cover all authorized deductions from their pay that we may require them to setup and deposit funds
for days off or tardiness. In other words if our cooks and chefs work less than 45 hours we still pay them their full salary.
14
es with the IRS for tax-exempt treatment. The annual premium for our family plan is $5,200.
ervice and two weeks for all employees with a year or more of company service. All our current employees qualify for two
service. All our current employees qualify for the 5 holidays.
ce. All our current employees qualify for the 5 sick days.
than 6 hours during a day. In addition, we provide two 10 minute paid breaks during the work day.
cks for bonuses.
U.S. Savings Bond programs.
bs) the customer left without paying. In other words we share the cost of "walked tabs". All our waiters and waitresses ha
a statement authorizing this "special" deduction.
and logo. We supply the first three at no cost and the employee is responsible for purchasing additional shirts that are los
"blanket" employee deduction authorization form.
hese required exams.
usiness- health exams for food handlers and tips must be reported by our tipped employees.
laws.
uired by law but we want to be competitive in attracting good employees.
s pay.
y nonexempt employees are paid on an hourly or other basis but the labor laws also allow you as an employer to use the
don't realize it.
ployee's manual (it doesn't have to be fancy) that contains your employee policies and prepare job descriptions. By doing
Pay Period
Bi-Weekly
(every two weeks)
15
Bi-Weekly
Weekly
Weekly
Weekly
Weekly
Monthly
Weekly
Weekly
Weekly
Various
3.02) rate per hour for Handsome Waiter.

e receives draws. Mom is not actually considered an employee. We'll discuss Ma in a later Lesson.
rds Act. Let's do the easy part first. Any worker that is not paid a salary is automatically classified as nonexempt.
oyee for management, professional, administrative, or similar services (exempt type of jobs). A salary is usually stated in
killed or unskilled employees in non management or supervisory jobs , the so called nonexempt types of jobs. With a "tru
y mean you don't have to pay that employee overtime. If the employee is also exempt you don't have to pay overtime; ho
nd tasks that the employee performs and if their salary is greater than $455 a week in order to determine if the emplo
under the exempt category.
16
d to qualify as an exempt employee; however, his job duties do not qualify for the exempt status.
ed to qualify as an exempt employee. We don't have to analyze his job duties because based on his salary he is already c
Fair Labor Standards Act) is our manager. All the rest of our employees are covered.
you already own a business you should check them out in order to make sure your business is complying with the new law
l) better gather up the information and get out her pencil, calculator, and tax tables .
eported Tips.
er and cooks who fill out a weekly time sheet and in addition any preparation employees also fill out a daily production rep
g the week.
sales amounting to $1000.

17
ister. Ma checked and Goodwith Cash hadn't used any of her 5 days allowed.
7 days remaining.
n't impress the lady customers that much.

these new policies. In the past, she did not hold her employees responsible for any of the cost.
.
a piece- his share of the breakage cost is $1.50 for 10 plates for a total amount of $15.
s. Handsome Waiter had total walked tabs amounting to $100.00 and Good Waitress had total walked tabs amounting to $
1/4% commission of the sales for the current two-week pay period. The sales for the month amounted to $100,000 and th
$217
ok-Notbad Cook, and Manager-Knowit All have signed up for and authorized a deduction for bonds and/or savings.
and employee authorization forms for other deductions. Ma's pretty smart and also saves time by keeping an employee s
oll file each pay period to find out what deductions and how much to deduct from an employee's pay each pay period.
arnings. In other words, we need to use the hours and other employee payroll information to calculate our employee's ear
Total
n Gross
$1,461.10
$888.95
$258.00
$221.46
18
$582.50
$283.30
) $3,500.00
$244.65
$300.00
$206.00
a week as agreed upon with Ma. If he works less than 45 he is also paid the same amount; however, since he is a nonexe
types of remuneration to be included in calculating an employee's regular and overtime rates. In our case, we need to inc
nus is based on a rate of 1/4 % of the sales during the two week pay period - $50,000. The sales during the first week we
is straight time rate of pay per hour is. We do this by dividing his weekly Salary amount of $650 a week plus his Bonus fo
mes the straight time rate for overtime hours. So all we need to do is multiply his straight time rate per hour time 1.5.
often called the premium portion of $7.86. All we're saying here is that Fat Chef makes an additional $7.86 an hour when
wo week payroll period.
19
worked over 40 hours during both weeks.
base salary and bonus and pay his overtime hours at his overtime rate of $23.58 - right ?
e is a little different. Why ? Because for any overtime hours worked between 40 - 45 hours we have already paid him his
3.58 overtime rate. What about any overtime hours that exceed 45 hours ? In that case, we would have had to pay any o
20
d on working up to 45 hours a week as agreed upon with Ma. If he works less than 45 he is also paid the same amount; h
d Chef however does not receive a bonus.
is straight time rate of pay per hour is. We do this by dividing his weekly salary amount of $400 a week by the number of
mes the straight time rate for overtime hours. So all we need to do is multiply his straight time rate per hour time 1.5.
ften called the premium portion of $4.45. All we're saying here is that Fat Chef makes an additional $4.55 an hour when h
is two week payroll period.
21
was paid his full weekly salary of $400.00. ?
urs worked up to and including 45 hours and another for the overtime hours worked over 45 hours. Can you tell me why ?
urly rate except that Ma wants to be able to track how much sick and vacation time costs her each year. Remember Goodw
22
we need to pay her any overtime for more than 40 hours worked during the week. Goodwith Cash only actually worked 3
ual hours worked and does not include holiday or vacation time not actually worked. So, the answer is no we don't have t
overtime hours were worked.
ross) for the week. We do however need to break it out between sick time and regular earnings because although not req
.15 an hour (current minimum wage ) and worked 42 hours during the week. Since he worked over 40 hours we need to
ade.
ceived from her customers each week. She had an excellent week and reported tips received amounting to $250.00 for th
r hour as long as her reported tips equal or exceed the maximum tip credit of $3.02 per hour, she's such a great waitress
. Her time card shows that she worked a total of 45 hours during the week and is entitled to 5 (45-40) hours of overtime
23
rnings.
lthough Ma did not actually pay Good Waitress's Tips amounting to $250, her customers did, Ma is required by law to inclu
loyer's share of social security and medicare based on Good Waitress's total gross pay including her reported tips.
ted tips.
ew and inexperienced and Ma only pays him the required $2.03 rate per hour when his reported tips equal or exceed the $
s time card Ma determined that Handsome worked 50 hours during the week. Your turn - do we owe him any overtime pa
ompared to Good Waitress's reported tips of $250.00.
Hour.
$3.02 per hour if the actual tip rate per hour equals or is greater than $3.02 per hour to offset this rate. If the actual tip ra
w that the required overtime rate is determined by multiplying an employee's straight time rate times 1.5. Our question is
ake at least a $5.15 an hour straight time rate including tips up to $3.02 an hour and be paid at least 1.5 times his straig
alculated tip credit for the current week was $1.00 an hour.
24
ported tips.
000 on an annual basis. In addition to his salary he is also paid a bonus of 1/2 % of monthly sales. During the month he t
s regular earnings amount regardless of the number of hours worked and is not paid for any overtime.
tter of multiplying the monthly sales times his bonus rate.
arnings - right ? Yes and no. Because as we stated earlier, Ma wants to keep up with how much holiday, sick time, and va
much to allocate to his vacation time.

" working hours in a year (2,080 hours).
urly rate times the number of hours of taken off for vacation.
m his normal salary for the month.
25
she produces. The piece rate for her job is currently $1.00 for each desert prepared by her. Ma determined from Betty's
ned based on minimum wage and her actual hours worked, Ma is required by law to pay her minimum wage.
. Ma determined from Betty's time card that she worked 45 hours during the week so she is entitled to 5 hours of overtim
um wage of $5.15 an hour, Ma must pay Betty the minimum wage for her actual hours worked.
d on minimum wage. Betty's overtime rate for the current week is 1.5 times the minimum wage ($5.15 X 1.5) or $7.73.
tal earnings for the week.
that he only worked 40 hours during the week .
multiple his rate per hour times his hours worked which are all straight time (no overtime hours).
special events. He is paid a 20 % commission of all banquet and special events sales. Banquet and special event sales tot
26
rked 40 hours during the week. We do however have to make sure that he makes at least minimum wage for the actual h
he worked.
ets calculate his hourly rate based on his commission earnings.
Talk Alot's earnings on the current minimum wage rate and his actual hours worked.
tions used for determining our employees earnings ?
urs during a week.
rly rate + tips, piece rate, sales commission rate, salary for exempt, salary for nonexempt, and additional bonuses for som
n employee's earnings, the employer must pay at least the minimum wage for the actual hours worked and must also pa
n employee's straight time and overtime rates.
rate of pay. The employee's actual calculated rate may vary week to week depending on what compensation they earne
gs ? To illustrate that calculating an employees earnings is not always just a simple exercise of multiplying hours times a
27
keth Away !
's gross pay (earnings), but we still have to calculate the deductions taken out from their pay. I guess there really is "no r
her Deductions
vings - (S)
S Bonds - (B)
p Wages - (TW)
alk Out - (WO)
eakage - (BR)
ortage - (CS)
niforms - (U)
.00 - (B)
.00 - (U)
.00 - (S)
.00 - (CS)
.00 -(BR)
.00 - (WO)
0.00 - (TW)
.00 - (WO)
.00 - (TW)
.00 - (S)
.00 - (B)
classified deductions into three categories:
28
sure that she's following all the labor laws since she made some new rules about some of the deductions she takes (dock
r labor law specialist.
she was doing a pretty good job of calculating her payroll but she might want to rethink some of her new rules concernin
that are classified as for the employer's convenience and that reduce an employee's wages below minimum wage. In effec
tems as shortages, breakage, or unpaid customer tabs from their wages since the deduction would reduce their wages bel
e of deductions from her higher paid employees. Dave also told Ma that in the future, she might want to discuss any new p
the shortages, breakage, and unpaid customer tabs and try to implement some better controls concerning customer unpa
omer tabs, and cash shortages. Her revised Payroll Worksheet appears below.
tions
)
B) Net Pay
(TW)
U)
984.97
583.60
166.08
136.34
W) 149.76
137.46
2377.85
29
155.76
196.87
123.07
e's pay.
d to do is multiply the wages subject to social security and medicare by the current rates. Wages subject to social securit
he maximum deduction amount for the year 2004 is/was $5449.80. This is based on the maximum earnings amount of $8
ax".
edicare is to multiply an employee's earnings less any pre tax deductions allowed times the appropriate rates. Additionally
y and medicare deductions ? If you recall, one of our assumptions about Ma's restaurant was that Ma pays 50% of a famil
thus qualifies for special tax treatment.
hose benefits deducted from an employee's wages (gross pay) before taxes come out. The medical insurance deduction in
e tax withholdings, the employee has more take home pay ( a bigger net pay check). The employer also saves on their
see what he saves and Ma as the employer also saves in payroll taxes.
30
id every two weeks, so if we assume he earns the same amount for each pay period, the saving for the entire year are $1
est of our employee social security and medicare deductions using a simple table. If you've got the urge, get out your calc
Deduction (Gross Earnings - Medical Insurance) X Medicare Rate Medicare Deduction

($888.95 - 100.00) X .0145 = $11.44
($258.00 -50.00) X .0145 = $3.02
($888.95 - 100.00) X .0145 = $11.44
($221.46 - 50.00) X .0145 = $2.49
($582.50 - 50.00) X .0145 = $7.72
($283.30 - 50.00) X .0145 = $3.38
($3,500.00 - 217.00) X .0145 = $47.60
($244.65 - 50.00) X .0145 = $2.82
($300.00 - 50.00) X .0145 = $3.63
($206.00 - 50.00) X .0145 = $2.26
s for income tax. The purpose of withholding income taxes is to take deductions from his/her earnings that will approxima
31
orated the above factors into easy to use tables. The tables are found in IRS Publication 15, Circular E.
ages and saves the employer from having to make additional calculations prior to using the tables.
monthly, and daily/miscellaneous) and the marital status of Single/Head of Household or Married.
using these pay periods you need to use the percentage method tables.
ding table.
ket within which the wages fall.
age bracket line to the table column that has the number of withholding allowances claimed by the employee where the am
kly, semimonthly, monthly, quarterly, semiannual, annual, and daily/miscellaneous), and there are separate sets of table
ance obtained from the withholding allowance table multiplied by the number of exemptions claimed on his/her W-4.
ding table.
y value of employee's withholding allowances) fall.
at portion of the wages that exceeds the minimum bracket amount.
n order to determine the amount to withhold.
y the percentage amount found in the table.

determined in Step (2) to finally arrive at the amount to withhold.
methods we discussed are probably two of the most commonly used. See IRS Publication 15, Circular E for more informat
unt of income tax to withhold from her employee's so she chooses the wage bracket tables method because she doesn't ha
g the table is:
and the column that has the number of allowances claimed and use the amount given as the employee's withholding amo
rried. We thus only need to use the tax tables for married-weekly, married-biweekly, and married-monthly employees in
ables are by pay period let's group our employee information by pay period - in other words by how often they're paid.
urity and medicare deductions ? Well, they also provide an income tax saving to Ma's employees. This saving is reflected in
32
l insurance premium before the amount of income tax withheld was calculated.
uction ? It actually depends on each of her employees tax bracket. Just for illustration purposes, let's assume an average
a year (50% X 5,200).
33
Medical Insurance
ed for Ma's business because she pays some employees weekly, biweekly, and monthly and all are married. If she had an
the IRS site. The Rows in the tables contain the Wage Brackets (ranges) and the Amount to Withhold and the Columns
mount to withhold from our employee's is simply (1) selecting the proper Pay Period Table and (2) using our employee's Ac
he employee's name and earnings that follow the IRS's actual tables - weekly - biweekly - monthly below so that you can
34
35
g allowances claimed is
2 3
be withheld is
0
0
20
0
0
0
0
36
n and the column for the number of allowances claimed by the employee on their W-4.
37
38
wances claimed is
2 3
thheld is
76
11
two weeks to find the row in the table that the employee's wages fell within and the column for the number of allowance
39
nces claimed is
3
held is
214
find the row in the table that the employee's wages fell within and the column for the number of allowances claimed by th
of income tax to withhold ?
hheld.
nt of taxes withheld.
as weekly, semiweekly, or monthly.
40
you an example or two of how to calculate the amount of income tax to withhold did ya ?
ding table.
e amount to withhold.

Pay Period One Withholding Allowance

Weekly 61.54
Bi-weekly 123.08
Semimonthly 133.33
Monthly 266.67
Quarterly 800.00
Semiannually 1,600.00
Annually 3,200.00
Daily 12.31
The amounts used in the above table are based on the following calculations:
ables are contained in IRS Publication 15 - Circular E. The Weekly , Biweekly, and Monthly tables are illustrated below. Ou
41
42
employee Knowit All for our examples.
hholding method:
ding table.
e amount to withhold.

d, number of exemptions claimed, and taxable earnings.
43
mption from our exemption table based on the employee's pay period and multiplying this amount times the number of allo
ayroll period and marital status. Our three example employees are all married and two are paid weekly and one is paid m
reduced by value of employee's withholding allowances) fall and obtain the information needed to calculate the amount to
ances ) is : The amount of income tax to withhold is :

of excess over
$28.10 plus 15% $435
10% $154

44
s ) is : The amount of income tax to withhold is :
of excess over
$121.60 plus 15% $1,883
acket Methods of calculating income tax withholdings.
ftware programs and when the IRS revises the tables the user many times have to pay what I consider an outrageous fee
easily be converted into a table for any payroll period - weekly, biweekly, etc. by performing some simple mathematical c
nd prorate the tax calculated based on the employee's actual pay period.
e weekly wages of $500 by 52 weeks to convert the weekly wage into an annual wage of $26,000. Subtract $6,400 ($3,20
rive at the weekly pay period amount to withhold.
not over $22,600.
monthly, etc. This is the reason it's used by many payroll computer software programs.
45
hat are similar to the tables provided by the IRS. You need to consult your state agency to find out what the requirement
state information you may need.
ddition to their regular withholding. This fixed federal or state tax deduction may be for any amount and may be discontin
46
hat the employee has authorized Ma to deduct from their wages. Note: Since tips paid by customers are required to be re
tions of employment deductions such as retirement, mandated deductions, health insurance deductions and voluntary ded
setting up an employee receivable or arrears account in order to deduct the amount in a future payroll period.
dicare, and income tax deductions, the IRS also has some additional optional methods. For additional information about th
it payments. Although I did not provide an example, you as an employer do need to be aware that you may have to make
ualify for taking the earned income credit on their personal tax returns. Basically, the credit is designed to provide lowe
of this early payment of the credit option. In my opinion, the reason is because it requires the employer to make some ad
ubmit Form W-5.
les we used to determine the amount of income tax to withhold.
rance deduction. For example, pre tax deductions for an approved employee retirement plan such as a 401 K is subject to
ations ?
help and guidance.
ecurity, medicare, and amounts of income tax to withhold from employee's salaries and wages.
ed amounts for state employee income tax. The states provide tables and methods similar to the IRS tables and methods
fied as an employee and is not included in the regular payroll. When Ma needs money to pay personal bills she receives w
ered quite a bit of material. What all did we cover ?
47
calculating the amount of employee income tax withheld.
help and guidance.

ecurity, medicare, and amounts of income tax to withhold from employee's salaries and wages.
ed amounts for state employee income tax. The states provide tables and methods similar to the IRS tables and methods
orn out doing all these calculations. I sure don't want you having to run to keep up ! You probably deserve a break - why
<--BACK NEXT-->
Lesson 8
Bean Counter
IRS Payroll Tax and Withholdings Deposit Rules
As most of you are probably already aware, the IRS requires employers to deduct social security and medicare
from their employee's wages and to match what is deducted from their employee's pay for social security and
medicare. Social security is deducted from an employee's earnings at the current rate (2005) of 6.2 % and
medicare is deducted at the current rate (2005) of 1.45% or a combined rate of 7.65 %. The employer is also
required to pay (match) 6.2% and 1.45% of an employee's earnings.
In our Lesson 3 examples, we deducted these amounts when calculating our employee's pay. Taking the
deductions is only half the battle. The other half of the battle is monitoring, filing the proper forms, and
depositing these deductions.
The IRS requires an employer to pay or deposit these taxes "as you go". Since these taxes are deducted from
an employee's earnings (reduce the amount directly paid to the employee) the employee has incurred an
unpaid liability to the IRS on behalf of his employees. Additionally the employer has also incurred a liability
to the IRS for his employer's share. These amounts can build up fast and become substantial liabilities if not
48
paid at regular intervals. Unfortunately, many businesses have had to shut their doors because they didn't
timely deposit these taxes and tried to operate using these funds to pay their other bills.
Note:This is very expensive financing because the IRS charges penalties and interest for not depositing or
depositing these taxes late. In addition, owners and employees may be held personally liable for the
business not making these required deposits.
If your business is having a tough time making these deposits this situation should be considered a red
flag and decisions and corrective actions are probably necessary in order prevent your business from having
to shut its doors.
IRS Publication 15 provides detailed instructions and guidance on payroll taxes and tax deposit requirements.
I've tried to simplify and summarize some of the main rules and requirements in order to give you the "basics
in a nutshell". As I stated in an earlier lesson, I do recommend you download or obtain a copy of IRS
Publication 15 and use it as a reference for determining the proper handling of payroll taxes and withholdings.
Normally, a business must periodically deposit income tax, social security and medicare withheld from
employee's wages along with the employer's matching contribution for social security and medicare (reduced
by any advance Earned Income Credit (EIC) payments) in an authorized financial institution or use the
Electronic Federal Tax Deposit System.
A payroll tax deposit is comprised of the federal income taxes withheld from your employeeâ€™s wages and
both the employee and employer portions of social security and medicare taxes.
In cases where the amount of taxes owed for a quarter are less than $2,500 (reduced by any advance Earned
Income Credit (EIC) payments) the amount owed for the entire quarter can be paid in full when the quarterly
tax report is due. Businesses subject to the monthly depositing requirements may also make their final
payment with the quarterly report instead of depositing the funds.
Businesses that have quite a few employees normally are required to make periodic deposits of payroll taxes
and withholdings based on a determination made at the beginning of each new calendar year. The two
methods of making deposits are (1) Monthly and (2) Semi-Weekly. The determination involves determining
what the liability was for what the IRS refers to as the look back period. If this liability is less than or equal to
$50,000 the Monthly Schedule Deposit Rules are used; otherwise, the Semi-Weekly Deposit Rules are used.
New businesses start out using the Monthly Deposit Rules.
What makes up the look back period ? The look back period is made up of four quarters. Two quarters from
your prior year and two quarters from 2 years prior to your current year. The quarters are July 1- September
30 and October 1 - Dec 31 from 2 years prior and January 1 - March 31 and April 1 - June 30 of your prior
year.
Let's use an example to illustrate what makes up the look back period. We'll assume our current year is 2005.
The quarters that make up our look back period are:
Prior Year:
First Two Quarters
January 1 - March 31, 2004
April 1 - June 30, 2004
Two Years Prior

Last Two Quarters
49
July 1 - September 30, 2003
October 1 - December 31, 2003
If reported taxes and withholdings during these four quarters are

2003 2004 less than or equal to $50,000, for calendar year 2005 the
July 1 Oct 1 Jan 1 Apr 1 Monthly Deposit Rules apply; otherwise, the Semi-Weekly
Deposit Rules are used. Note: Advanced Earned Income Credit
Sept 30 Dec 31 Mar 31 Jun 30 Payments are not used as a reduction of taxes for this
calculation.
When are these required deposits made ?

If your business qualifies for the Monthly Deposit Rules, the deposit for taxes on wages paid during a
monthmust be made by the 15th of the following month. In other words, taxes on wages paid in January
must be deposited by February 15, taxes on wages paid during February by March 15, and so on.
For those that must adhere to the Semi-Weekly Deposit Rules, they basically have 3 banking days at the
end of two IRS stated periods to make their deposit.
The two periods are:
(1) Wednesday - Friday
(2) Saturday - Tuesday
(1) Payroll tax obligations resulting from wages paid between Wednesday and Friday need to be deposited by
the following Wednesday. Although this calculates to be 5 days, it's actually 3 banking days when Saturday
and Sunday are excluded.
(2) Payroll tax obligations resulting from wages paid between Saturday and Tuesday need to be deposited by
the following Friday (3 banking days).
Note: Regardless of the method you use for determining when to make deposits, you must make a deposit by
the next banking day if your tax and withholding liability reaches $100,000 at any time. If you are currently a
Monthly Depositor, you are also required to begin using the Semi-Weekly Deposit Rules.
You use Form 8109 (coupons) to make deposits at authorized financial institutions or the Electronic Funds
Transfer Payment System (EFTPS) . Which should your business use ? The IRS is gradually moving in the
direction of requiring all businesses to use the EFTPS. Currently, only businesses that have many employees
might be required to use the electronic payment system. Basically, if your total payroll deposits were more
than $200,000 in the period 2 years prior to your current year or you were required to use the EFTPS system
in the prior year, you are required to use the EFTPS system.
Penalties for not abiding by the deposit rules can range from 2% to 15% of your unpaid tax liability. Interest
is also charged on the unpaid balance. In addition, the IRS has what is called a Trust Fund Recovery
Penaltywhich may be imposed on any or all persons who are determined by the IRS to be responsible for
collecting, accounting for, and paying over these taxes and who acted willfully in not doing so. The amount of
this penalty is the amount withheld for income tax, social security, and medicare that has not been paid. The
employer's share of social security and medicare is not included.
Forms Used To Report IRS Taxes and Withholdings

As I stated earlier, not only does a business have to pay or deposit these deductions as they go
but periodically they must also file forms that summarize and report the information about these
deductions. Form 941 is filed each quarter to report and summarize the deductions made from
your employee's wages and the deposits made to the IRS for these taxes and withholdings. In
2005, the IRS released the newly designed Form 941. The redesigned form features an improved
layout, plain language instructions, simplified deposit reporting and paid preparer identification.
50
51
52
53
Unemployment Taxes
Most states have payroll taxes that are normally only paid by the employer and are used to accumulate
funds for paying employees when they are unemployed. The federal government also collects these
taxes and uses the money to administer the unemployment programs. If your business has any
employees, you will normally have to pay both state and federal unemployment taxes.
Federal Unemployment
If you have at least one employee for 20 calendar weeks during the current or preceding calendar year,
or you pay at least $1,500 in wages during any calendar quarter in the current or preceding year you are
required to pay federal unemployment taxes.
54
Form 940 or 940-EZ are used to report and account for Federal Unemployment Taxes. The report is
filed annually and is due by January 31. If all Federal Unemployment taxes have been paid (deposited)
when due, you may take some additional time and file on or before March 10.
Which form 940 or 940-EZ should you use ? If you qualify, the 940-EZ is easier to prepare. In order to
qualify to file the 940-EZ your business must meet all of the following conditions:
 Pay state unemployment taxes to only one state.

 Pay all state taxes that are due by the due date for filing the Federal Unemployment report (940
or 940-EZ).
 All wages subject to Federal Unemployment Tax are also taxable for State Unemployment Tax.
The taxes are calculated and paid (deposited) quarterly. They should be deposited by the last day of the
first month following the end of a quarter. If the calculated amount for any quarter is less than $500, the
calculated amount may be carried over to the next quarter. In other words, the tax needs to be paid
when the balance is $500 or more.
The federal unemployment tax rate is 6.2 % but this rate is reduced by a maximum of credit of 5.4% for
payments made to your state unemployment tax fund. If your business qualifies for the maximum state
credit, the rate used to compute your federal unemployment tax is .8 %.
How do I calculate the federal unemployment tax ? Simply determine the wages paid during the quarter
that are subject to the tax and multiply by the federal unemployment tax rate of .8 % (in most cases).
The federal unemployment tax only applies to the first $7,000 of wages that you pay to each of your
employees so in order to determine the wages paid during a quarter that are subject to the tax you need
to calculate what is called their exempt wages. Exempt wages are wages paid to any of your employees
during a quarter that exceed $7,000.
Not only does a business have to pay or deposit these taxes as they go, but periodically they must also
file forms that summarize and report the information about these taxes. Form 940 or 940-EZ is
filed annually to report and summarize these taxes and the deposits made to the IRS for these taxes.
Form 940-EZ
55
56
Form 940
57
58
59
The following links are provided to allow you to obtain the 941 forms and instructions.
941 Form - PDF

http://www.irs.gov/pub/irs-pdf/f941.pdf
Schedule B - PDF
http://www.irs.gov/pub/irs-pdf/f941sb.pdf
941 Instructions - PDF

http://www.irs.gov/pub/irs-pdf/i941.pdf
Schedule B Deposit Schedule- Instructions - PDF

http://www.irs.gov/pub/irs-pdf/i941sb.pdf
State Unemployment Taxes
60
Normally, state unemployment taxes are imposed directly on employers and the business (employer)
does not withhold these taxes from employees' wages. In most of the states, if you're required to pay
federal unemployment tax you're also required to pay state unemployment tax. Actually all employers
should check with their state to determine what if any special rules apply. The tax is usually reported
and calculated quarterly and the state supplies the forms used for reporting and calculating the tax.
Normally, like the Federal Government each state has a maximum wage amount on which the tax is
imposed on each employee's wages. Once an employee's wages for the calendar year exceed the
maximum amount, you as an employer are not required to pay any more employment tax with respect
to that employee. In other words, if the limit per employee for your state is $7,000 , once an employee's
earnings exceed this limit you will not have any additional unemployment liability resulting from any
additional wages paid to this or any other employee whose earnings are $7,000 or greater.
In order to calculate the tax, the state assigns a rate (experience rating) for the business to use normally
based on their experience. In other words, if your business has a lot of layoffs your assigned rate will be
higher than if your business has relatively few layoffs. If your starting a new business, an initial rate
will be assigned and won't be adjusted until you've contributed to the state's unemployment
compensation program for a specified period of time and have established a history where a new rate
based on your experience can be assigned. Rates for established businesses are normally adjusted each
year.
The state supplied forms are relatively easy once you have the information assembled for making the
calculation. For the quarter, you will need the total amount of wages paid to your employees and the
amount of what is normally called exempt wages. These are wages paid to each employee during a
quarter that exceed the state's maximum limit.
Calculating what you owe is just a matter of multiplying the total wages paid less the exempt wages for
a quarter by the businesses' assigned rate.
Most small business owner's don't want to fool with preparing these forms and have their bookkeeper or
accountant prepare them for them. You should, however, at least be familiar with your deposit and
reporting requirements and make sure that they are performed in a timely manner.
Additional Help & References:
Downloadable PDF Versions

If you followed my recommendation in the Introduction, you have already downloaded some of these
references.
IRS Employer's Tax Guide

Publication 15 Circular E - PDF
http://www.irs.gov/pub/irs-pdf/p15.pdf
This publication discusses the Employer's Payroll Requirements.
61
IRS Publication 505 Tax Withholding and Estimated Tax
Publication 505 - PDF
IRS Publication 583 Starting a Business and Keeping Records

Publication 583 -PDF
Online Versions
Or at the very least review the online versions of the Publications.
IRS Employer's Tax Guide

Publication 15 - Circular E
http://www.irs.gov/publications/p15/index.htm
IRS Publication 505 Withholding and Estimated Tax

Publication 505
http://www.irs.gov/publications/p505/index.html
In this lesson, I hope you learned at least a little about how to report and deposit
the amounts deducted from employee's wages for social security, medicare, and
income tax. You did recall that you (company), as an employer, are also
required to match the amounts deducted from your employee's wages for social
security and medicare didn't you ? In addition, we discussed other payroll related
taxes such as federal and state unemployment.
Time flies when your having fun - I know learning about payroll isn't really my idea
of fun either ! Believe it or not, we're half way through ! Let's move on and discuss
Payroll Records.
Lesson 5
Payroll Records
rds is Payroll. You need to dot your i's and cross your t's in order to comply with all the government laws and regulations
omplete forms and additional guidance and lays out and explains some of the documents, forms, and records used for ma
needed in order to run and maintain an adequate payroll system. A Payroll System is nothing more than the forms, docu
governmental requirements. The system can include manual as well as computerized operations.
l System. The purpose of this lesson is not to provide you with detailed instructions for filling out each line of all the vario
s and records that a small business owner at least needs to be familiar with.
62
k out your employees and any references supplied. In addition, you may want to even hire a service to do a background c
oad a free sample employment application forms.
the information necessary for properly withholding the correct amount of income tax from your employee's wages. Form
ey wish to withhold for federal tax purposes.
s provided by the IRS. IRS Online W-4 Instructions
63
red and used to verify that every employee you hire is eligible to work in the United States.
64
65
m W-5 with their employer. This tax benefit available mainly to lower income employees with a child authorizes the employ
s made to any of their eligible employees. This is one area that many small businesses overlook due to the "hassle", but it
66
ed a time sheet. The sheet includes the date worked, regular hours worked, overtime hours worked, holiday, sick, or perso
used in conjunction with a time clock where the employee enters his/her card to clock in and out and the day and hour ar
67
basic knowledge regarding Journals, the General Ledger and its associated Chart of Accounts, and of course debits and cre
s in our payroll accounting records. Ma's a smart gal so she decided she wanted to keep track of her payroll costs by the ty
nts. In this lesson, we'll only be concerned with our payroll expense and liability general ledger accounts. How do yo
payroll costs. Ma could have used just one account called Payroll Expense where the salaries and wages of all her employ
68
Ma set up a bank account just to use for issuing all her payroll checks called Cash-Payroll. She could have used her regula
ount to find payroll checks if she needed them.
s funds from her Cash-Regular bank account to her Cash-Payroll bank account. We'll make a general journal entry to illus
on is that the amount we transfer into this checking account is always equal to the total of all the payroll checks that have
General Journal Page 1

Post
Entry No Date Account Name Debit Credit
Ref.
1 Dec 30, xxxx Cash-Payroll 1010 5,011.76
Cash-Regular 1000 5,011.76
Record Payroll Transfer
69
ments Journal to record the money transferred from our Cash-Regular bank account to our Cash-Payroll bank account.
as I explained in Lesson 4, Payroll Taxes and Withholdings, employers are required to match and contribute the amounts
we also need to assign all of our employees to a payroll expense account. Ma prepared the following Table that shows wha
You may; however, allocate (charged) an employee's salaries and wages to more than one payroll expense account if a
on that Ma might in the future want to think about setting up additional General Ledger Accounts for ? Remember there y
g her for time off.
st common types of journals used for recording and summarizing your business transactions; however, the Payroll Specia
ayroll this is where the discussion actually belongs.
s from my Special Journals Tutorial.
various source documents. Source Documents are the original sources of information that provide documentation (proof)
usiness documents. These documents provide us with the information needed to record our financial transactions in our bo
as buying and selling. A business deal or agreement.
70
the first place that business transactions are formally recorded. Specialized Journals are journals used to initially record
h received by a business in one place.
ncreasing internal controls and allocating the record keeping workload.
formation by pay period and is used to post the summary totals to the General Ledger. Small businesses could use their C
place (your payroll journal).
arged. In addition, all the deductions taken from salary and wages are charged to the appropriate liability or expense offse
calculations for issuing our employees their checks -now we need prepare the checks and record them.
ect Depositwhere an employee's net earnings are deposited directly into their personal bank account.
we need to use to record our payroll entries in our journal.
eping records.
Dec 30, xxxx.
Cash
Payroll Check
Number
edit 1010 Credit
984.97 1000 (X)
583.60 1001 (X)
166.08 1002 (X)
136.34 1003 (X)
149.76 1004 (X)
137.46 1005 (X)
2377.85 1006 (X)
155.76 1007 (X)
196.87 1008 (X)
71
123.07 1009 (X)
5011.76
(X)
se accounts and a column for each of the various types of payroll deductions. We could have set up a column for all the pa
he Payroll Journal to the appropriate General Ledger Accounts. Actual postings to the General Ledger Accounts are not illu
its information has also been recorded in the Employee's Earnings Record.
onstrate how the employee's earnings are also posted to Individual Employee Earnings Records.
a business that has employees is responsible for matching the deductions taken from employee wages and salaries for so
olumns of figures is not really my idea of fun either.
Account Account Amount

Name
2005 Federal Income Tax Withheld 404.00
2006 FICA Withheld 445.10
2007 Medicare Withheld 104.10
2008 State Income Tax Withheld 794.00
5015 health Insurance 767.00
2009 Employee Savings Accounts 45.00
2010 Employee Bonds 50.00
5016 Uniforms 25.00
5010 Tip Credit 300.00
1010 Cash-Payroll 5011.76
Total Credits 7945.96
entry recording the employer's share of social security and medicare in my above table. I did this because I wanted to firs
ount of $549.20 was debited to Account 5011 - Employer FICA & Medicare and the same amount was credited to Account
ducted from all employees for medicare.
72
t mean handing out the checks. Fortunately, Mom only has ten employees. Distributing (assigning wages to the General L
oftware distribute the wages, but also perform all the payroll calculations, print checks, and provide you with the reports a
his is how we got them.
wo employees would you rather deal with ?
, I'd much rather deal with the guy on the left. Below is one of the main reasons people work for you and believe me it be
73
Ma's Secret Recipe Check Number:1002
Payroll Checking Account
1000 Anywhere St
Anywhere City, Anywhere State
xxxxx
Date:December 30, xxxxx
Pay To The
Order Of Goodwith Cash $162.26
One Hundred Sixty Two and 26/100 ---------
Dollars
SWNB
Some Where National Bank
Ma's Signature
Special Routing Codes
their earnings and all the deductions made to arrive at their check amount. This recap is normally attached at the top or
for each employee. For illustration purposes, we'll use partial payroll data for our employee Goodwith Cash. The earnings
ighted in yellow is the general information section of the earnings record.
to an employee and what earnings and deductions were used in calculating the net amount of the check.
emember those quarterly tax reports we discussed in Lesson 4 -Payroll Taxes and Withholdings ? These records provide t
2's.
mit is used in the payroll calculation such as medicare and federal and state unemployment.
Marital Status
Address
& Allowances
999 Some Street
M-2
Somecity, Somestate 99999
Medical Insurance Net Pay Check Number YTD Earnings
n)
650.00 1826.37 3250.00
74
n)
650.00 2064.60 6850.00
n)
650.00 2007.25 10350.00
450.00 1609.42 Various 13142.00

50.00 172.05 885 13442.00
50.00 244.40 905 13842.00
50.00 155.87 950 14092.00
50.00 162.26 1002 14350.00
650.00 2344.00 14350.00
2600.00 8242.22 14350.00
g record. In all my tutorials I try to stress the fact that your records are yours and you can tailor them to suit your own n
mally deduct from your employee's wages.
uch you paid an employee for vacation days not worked. What would you have to do if you didn't have a column for vacat
ary earnings record that summarizes the total amounts of all your earnings record columns for all your employees.
75
ployees that worked for you at any time during the prior year. Do you recall where we get the information for completing
with the W-2 form. A copy and instructions are provided below.
76
to file electronically (computer media, disk, etc.) It appears that in the future, even smaller businesses will be required to
eporting provided by the Social Security Administration on their web site. In order to use this tool, you must register and
You do my least liked business task, filing. We may not like it, but it's a necessary evil. You should maintain an Employe
ntain a Company Payroll File that includes a copy of any payroll forms, documents, and records required by governmen
77
equired forms in prior lessons.
of what records you might want to include in your Payroll Files.
ram as one of the ingredients to your payroll system.
records an employer needs to prepare and maintain were illustrated and discussed. Maintaining and keeping up with all t
puter and software to make your payroll tasks easier and less time consuming - even if you only have a few employees.
he question "What About Ma" ? In our next Lesson - Self Employed we'll answer this question.
78
Bean Counter
New business owners are sometimes caught off guard ( with their pants down ) when preparing their first
income tax return. In addition to paying income tax, they find out that they are also required to pay SECA
taxes. What the heck are SECA taxes ? The abbreviation SECA stands for the Self-Employment Contributions
Act.
The SECA tax is basically the business owner's version of the Social Security and Medicare tax that employers
and employees pay. If you recall from our discussion about deductions, employees that work for you have
social security and medicare deducted from their wages. In addition, you as their employer are also required to
match their deduction.
 Who is considered to be Self-Employed ?

Basically, anyone that has an ownership interest in what is called a "flow thru" type of business
organization. The one exception is a Subchapter S corporation where working owners are considered
employees.
 What's the Tax Rate ?
The basic tax rate for the self-employed under SECA is 15.30 percent for 2005. If you noticed, the rate
is twice the 7.65 percent rate that employees must pay. This is because you as an owner (self-
employed) are paying the employee's share and the owner's share on your own earnings.
 Are there any limits on SECA Taxes ?
The SECA Tax rate of 15.30 is made up of the Medicare portion of the tax which is 2.9 percent of all
your net business income, with no upper limit. In addition, the Social Security portion of the tax is 12.4
percent. It however has an upper limit and only applies to the first $90,000 of earnings for 2005. This
upper limit usually increases each year.
 What if you work as an employee for someone else and also have a business ?
In that case, the amounts deducted from your wages while working as an employee for someone else
will count towards meeting the $90,000 limit.
 What earnings are included in the calculation ?
Earnings included in the calculation are your business income that you earned from your sole
proprietorship, partnership, or LLC treated as a "flow thru" entity. If these earnings are less than $400
you are not required to pay any SECA Tax.
 Are there any Special Provisions ?
Employers get to deduct their contributions when figuring their income tax, do the self-employed get to
deduct a portion of their self employment tax ?
There are two provisions in the tax law used when calculating the tax that attempt to place self-
employed individuals on the same level as employees.
o First, your net earnings from self-employment are reduced by an amount equal to half of your
total self-employment tax rate for the year. For 2005, this amounts to a reduction of 7.65
percent of your net earnings from self-employment.
o Second, you are allowed to deduct half of your self-employment tax from your gross income on
your Form 1040 (Personal Income Tax Return).
Estimated Tax Payments

Another area where many new business owners get caught with their pants down is estimated payments.
Many have been used to working for someone else and having the required deductions for social security,
79
medicare, and income tax taken out of their earnings each pay period. Since the self-employed individual does
not receive an "actual payroll check" (they get what are called draws), the IRS requires the self-employed to
make estimated tax payments so that the individual does not end up at the end of a year owing income tax
and self-employment tax and not having the cash available to pay them.
Self- Employed
Employees receive a W-2 that reports their earnings and amount subject to social
security and medicare. How do the self-employed determine their earnings subject to
self-employment tax and also their earnings subject to income tax ?
It actually depends on the type of business organization. As we briefly mentioned

earlier, owners of the "flow thru" types of business organizations are required to pay self
employment taxes (except Sub- S Corporations). "Flow Thru" types of organizations are
business organizations where all the earnings are allocated to the individual owners and
the organization itself is not subject to federal income taxes- the owner's are.
 Sole Proprietorship
A sole proprietor prepares a Schedule C or Schedule C-EZ that is used to calculate the earnings and
amounts subject to income and self employment taxes.
 Partnership
A partnership prepares a Form 1065 and distributes a Form K-1 to each partner that is used to report
individual partner earnings and the amounts subject to self-employment tax. The individual partner
transfers the information from the K-1 to his Schedule E.
 Limited Liability Company ( LLC )
LLC's when formed make an election with the IRS on how their type of organization will be treated for
tax purposes. If the LLC elects to be treated as a single entity (sole proprietorship) or a partnership the
owner's earnings will be subject to self employment taxes and similar forms used by a sole
proprietorship and partnership are used to calculate and report earnings.
 Corporations
Owners (stockholders) who also work as employees are not considered to be self-employed and receive
regular pay checks and thus are not subject to self-employment taxes. This is the case whether the
corporation is a "regular" corporation referred to as a C-Corporation or the corporation is a special type
of corporation know as a Subchapter-S or S-Corporation. These owner employees receive W-2's.
How does this tax benefit the self employed owner ? By making these "contributions", like an individual who
worked for someone all their life, you too will be eligible to receive social security and medicare benefits when
you retire.
Computing Your SECA Tax

IRS Form SE is used to calculate the amount of this tax. The Form for 2004 is illustrated below. Note: The limit
for 2005 has increased from $87,900 used for 2004 to $90,000.
80
81
82
83
IRS Form SE Online Instructions
IRS instructions on how to fill out the annual SE Form (Self Employment Form)
What About Ma ?
In Lesson 3, Ma (the owner) was left out of the payroll calculations because she is
considered to be self employed. So, in this lesson we'll use Ma to illustrate how to
calculate her earnings for income and self employment taxes.
In order to illustrate the calculations we'll use the following assumptions regarding Ma doing business as -
Mom's Secret Recipes. Ma called in her bright and handsome accountant, Dave Marshall (that's me) , from
Bean Counter and together they assembled the following figures for the year.
Sales and Revenues $1,000,000
84
Costs and Expenses:
Cost Of Food Sold 525,000
Employee Wages & Salaries 190,000
Employer Social Security & Medicare 14,535
Unemployment Taxes 4,340
Health Insurance 26,000
Building Rental 24,000
Utilities 12,000
Business Permits & Taxes 5,000
Depreciation 15,000
Supplies 10,000
Advertising 12,000
Telephone 6,000
Professional Fees 5,000
Total Expenses 848,875
Net Income/Loss $151,125
Ma's Draws 50,000

Ma's Medical Insurance 5,200
If you noticed, two of the amounts listed in our schedule above are not included in our computation of Ma's
profit or loss on Schedule C. Can you tell me which two items ? I'll give you a hint. They are the items
highlighted in yellow.
 Draws are not business expenses. They are just advances made to the owner in order to provide cash
for paying personal bills and living expenses.
 Medical Insurance for employees is deductible; however, medical insurance for self employed
individuals (Ma) has special rules on how this type of expenditure is handled.
Since Ma is a sole proprietorship our next steps are to prepare IRS Form Schedule C and IRS Form SE to
determine Ma's earnings subject to income and self employment tax. Our Schedule C Net Income (Profit)
amount is $151,125. Looks like Ma's restaurant had a pretty good year.
Your SECA tax is computed by filling out either the long or the short version of Schedule SE. Most people can
use the short version of the form. The IRS Form SE has an easy flow chart to follow in order to determine
whether to use the short or long version of the form.
Ma qualifies to use Section A - Short Schedule SE to calculate her self employment tax.
Line 1 Net Farm Income 1

Line 2 Net Profit or Loss from Schedule C 2 151,125
Line 3 Combine Line 1 and 2 3 151,125
Line 4 Net Earnings From Self Employment 4 139,564 Line 3 multiplied by 92.35 % (.9235)
151,125 X .9235
Line 5 Self Employment Tax 5 15,207 (1) Line 4- 139,564 X 2.9 % (.029) = 4,047
(2) 90,000 (maximum limit) X 12.4% (.124) =
85
11,160
(3) Total = 15,207 (4,047 + 11,160)
Line 6 Deduction for one-half of self 6 7,604 Line 5 multiplied by 50% (.50)
employment tax 15,207 X .50
Don't forget to give yourself an income tax deduction for one-half of your SECA tax and transfer this amount
to your Form 1040. This allows you to avoid paying income tax on one-half of your SECA tax amount. Since
employees don't have to pay income tax for contributions made by their employers, the IRS provided this
provision to provide a similar benefit to the self employed.
There are also two optional methods of computing SECA tax which are basically used by farmers and low-
income non-farmers. The optional methods of computing net earnings from self-employment allow you to pay
SECA tax as if your net earnings were higher than they actually are. Why would anyone want to pay more than
they have to ?
In order to qualify for social security and medicare benefits when they retire.
Did you notice that we used the two special provisions that we mentioned earlier that attempt to place the self
employed individual on the same level as employees in our calculation of Ma's self employment tax ?
First, the net earnings from self-employment were reduced by an amount equal to half of the total self-
employment tax rate for the year. For 2005, this amounts to a reduction of 7.65 percent of your net earnings
from self-employment. This was accomplished by multiplying the Ma's earnings by 92.35 %.
Secondly, we calculated and deducted half of Ma's self-employment tax from her gross income on her Form
1040 (Personal Income Tax Return).
What about that medical insurance premium that Ma paid for her own coverage but was not allowed to deduct
on her Schedule C ? In the past, the self employed individual's benefit was somewhat limited. Currently, the
rules and laws have been improved. Although Ma does not take the deduction on her Schedule C, she is
allowed to deduct the expense on her 1040 (Personal Tax Return) and receive the benefit of using this
deduction to reduce her taxable income and thus the amount of income tax she must pay.
The same applies to other "pass thru" types of business organizations. The adjustment is available to sole
proprietors, LLC's, general partners and shareholder-employees of S Corporations. The adjustment is taken on
the first page of the Form 1040.
Federal income tax is a pay-as-you-go tax. The estimated tax system is the self employed owner's version of
the taxes that are withheld by employers from employee wages each pay period.
Self-employed workers that meet the IRS guidelines are required to pay estimated income and self
employment tax as the income is earned and the self employment tax is accrued during the year. This is
accomplished by making estimated payments directly to the IRS each quarter using the Electronic Federal Tax
Payment System (EFTPS) or by submitting your payments along with Form 1040-ES payment voucher.
Generally, your withholding and estimated payments for 2005 must total at least 100 percent of the tax shown
on your 2004 return or 90 percent of your anticipated 2005 tax liability, whichever is less.
In order to determine if you need to pay these installments and how to determine the amounts the IRS has
provided a worksheet and detailed instructions. See the worksheet below.
86
87
In this lesson, we learned that the Self Employment Tax (SECA) is basically the
business owner's version of the Social Security and Medicare tax that employers
and employees pay. If you recall from our discussion about deductions, employees
that work for you have social security and medicare deducted from their wages. In
addition, you as their employer are also required to match their deduction.
You should also have picked up that basically, anyone that has an ownership
interest in what is called a "flow thru" type of business organization is subject to
this tax. The one exception is a Subchapter S corporation where working owners
are considered employees.
Keep your head on we're almost done.
Lesson 7
Government Regulations
88
If you have read George Orwell's book 1984, you'll remember that the main theme is about Big Brother
watching you and about rules and regulations. Well our societies "Big Brother" is government at all levels
from federal to state to local. While it's difficult to keep up with all the ins and outs, a basic familiarity with
these rules, laws, and regulations is needed by most small business owners.
 What areas do some of these payroll related laws cover ?

 In prior lessons, we covered Social Security and Medicare that employees and employers are required
to provide and/or participate in order to receive future medical and retirement benefits. In addition, we
covered Self-Employment taxes that apply to certain types of business organization owners. These
programs are governed by federal law.
 Employment Discrimination laws purpose is prevent discrimination between individuals based on race ,
religion, sex, age, disabilities, or national origin. Federal and state law compose the main body of
employment discrimination law. Most of us are familiar with The Equal Pay Act that basically prohibits
paying different wages to individuals performing the same basic job.
 Another law administered by federal (Fair Labor Standards Act) and state laws that we are also
familiar with is the Minimum Wage Law that prohibits employers from paying employees less than this
minimum rate per hour worked. The Fair Labor Standards Act is the federal statute that provides for a
minimum wage and the payment of overtime. Many states also have labor laws pertaining to the
payment of wages. State statutes may even provide greater employee protection than the federal law.
Employers must be aware of not only federal labor laws but also any state laws. If state and federal
laws differ, the law that provides the greater benefit to the employee is usually the law that pertains.
 The Family and Medical Leave Act (FMLA) requires all employers with at least fifty workers to allow
qualified employees time off for attending to personal matters such as the birth or adoption of a child
or caring for a spouse, child, or parent with a serious health problem.
 Unemployment insurance provide terminated workers with temporary benefits to help soften the loss
of the earnings from their job and provide them time to find another similar job.
 Federal and State Workers' Compensation laws are provided to provide benefits and awards to
employees and/or dependents for employees who are injured, killed, or disabled on the job.
 The main statute protecting the health and safety of workers is the Occupational and Safety Health Act
(OSHA). Federal and State workplace safety and health laws are designed to have employers provide a
safe work environment for their employees in order to eliminate injuries and illnesses from occurring in
the workplace.
 Pensions are governed primarily by federal law. In order to encourage employers to provide pension
plans that follow congressional guideline and law such as the Employment Retirement Income Security
Act (ERISA) tax breaks are provided to employers who follow the guidelines.
 Although we don't hear much about unions anymore, they still represent an area that many employers
still must deal with. The main body of law governing collective bargaining is the National Labor
Relations Act (NLRA). This law grants employees the right to collectively bargain and join trade unions.
I know laws, rules, and regulations are a pain in the butt. Even so, we need to know
about them and apply them to our business where applicable. This lesson provided
you with a brief overview of some of the main employment laws and regulations that
might pertain to your business.
<--BACK NEXT-->
89
Bean Counter
Lesson 8
What You Should Know
Bean Counter
You should realize by now, that there's a lot more to Payroll than just multiplying, adding, and subtracting.
What Did We Cover ?

The Introduction provided an overview of payroll, employees, and your requirements as a business.
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 "perks".
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 plans.
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 this tax.
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 ?
90
 How to determine whether an Employer Identification Number is needed and how to apply.
 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 as self-employed.
 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 earnings.
 How we grouped an employee's total compensation into four categories:
o Regular
o Additional
o Employer Provided Benefits
o Benefits Provided By Law
 How fringe benefits (perks) help attract qualified employees.
 Why it's a good practice to have signed authorizations for deductions taken from an employees wages.
 How we classified deductions from pay into three categories:
o Deductions Required by Law
o Deductions for the Employer's Convenience
o Deductions for the Employee's Convenience
 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 pay period.
 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 wages.
 All nonexempt employees must be paid overtime for all hours worked in excess of 40 hours during a
week.
 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 employees.
 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
guidance.
 Learned that some deductions called pre tax receive favorable tax treatment
91
 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 amounts.
 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
unemployment taxes.
 What records are needed for a payroll system.
 Who is subject to self employment tax.
 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 $69.95.
To evaluate a free fully functioning trial version:

Click on
PayWindow to download your Free Fully Functioning trial version of PayWindow and take it for a test
drive.
http://www.dwmbeancounter.com/cgi-bin/track/tracker.cgi?PayWindowSite
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 Payroll.
 Exam-1 Payroll
 Exam-2 Payroll
92

BK Payroll

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

BK Payroll

Diunggah oleh

Hak Cipta:

Format Tersedia

So, you

All U.S. busin

Let's first loo

The Fair Labo

The Act (FLS

The FLSA req

What does "e

What does "n

Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson 5 Lesson 6 Lesson 7 Lesson 8

services they provide. Common types of regular compensation are:

s determined by the employer or as a customary practice of the industry.

80 hours (10 days)

80 hours (10 days)

$4,200 annual premium paid

$600 annual premium paid

$3,000 annual contribution

mpany is offering the best deal.

Now let's total up our total annual compensation.

Hourly Pay For Hours Worked During Year $27,600 $34,300

Vacation Pay 1,200 700

Holiday Pay 1,200 700

Sick Pay 1,200 700

Group Life Premium 600

Retirement Contribution 3,000

Total Compensation $39,000 $36,400

ny A. Fringe Benefits made a big difference.

Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson 5 Lesson 6 Lesson 7 Lesson 8

Deductions From Pay

 Basically deductions from pay can be classified into three categories:

 Social Security- mandatory "contributions" to the federal retirement system.

Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson 5 Lesson 6 Lesson 7 Lesson 8

a statement authorizing this "special" deduction.

3.02) rate per hour for Handsome Waiter.

sales amounting to $1000.

n't impress the lady customers that much.

wo week payroll period.

d Chef however does not receive a bonus.

is two week payroll period.

ompared to Good Waitress's reported tips of $250.00.

tter of multiplying the monthly sales times his bonus rate.

much to allocate to his vacation time.

m his normal salary for the month.

tal earnings for the week.

that he only worked 40 hours during the week .

ets calculate his hourly rate based on his commission earnings.

tions used for determining our employees earnings ?

urs during a week.

classified deductions into three categories:

Deduction (Gross Earnings - Medical Insurance) X Medicare Rate Medicare Deduction

n order to determine the amount to withhold.

y the percentage amount found in the table.

g the table is:

of income tax to withhold ?

as weekly, semiweekly, or monthly.

y the percentage amount found in the table.

Pay Period One Withholding Allowance

y the percentage amount found in the table.

d, number of exemptions claimed, and taxable earnings.

ances ) is : The amount of income tax to withhold is :

y the percentage amount found in the table.

acket Methods of calculating income tax withholdings.

state information you may need.

ubmit Form W-5.