Whether you are learning payroll or have been working in payroll for many years, we hope that this Payroll Dictionary will be of service to you. New hire reporting is a process employers undergo to report new hires to their state. Federal law requires that all new hires be reported within 20 days of their hire date, but some states are stricter (Alabama requires seven days).

  • Under the National Employment Standards, a full-time employee is entitled to 10 days of paid leave and pro-rata for part-time employees.
  • The FICA tax rate is 15.3%, split evenly between employees and employers, with 12.4% going toward Social Security tax and the remaining 2.9% for Medicare.
  • Exempt – Amounts that are not considered part of the taxable compensation.
  • Its job is to administer both Social Security and the Supplemental Security Income (SSI) program.

Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month. Whether you are new to payroll, or someone on your team is, The A to Z of payroll will take you through the fundamentals to build a solid knowledge base. Your job is to ensure systems are in place to reduce errors where possible and quickly correct mistakes as they occur. Either way, your organisation’s payroll performance requires everyone on the team to have a working knowledge of UK payroll terms.

FICA

State Unemployment Tax Act (SUTA) taxes fund state-administered unemployment programs. SUTA is an employer-paid tax, except in Alaska, New Jersey, and Pennsylvania, where both employers and employees chip in. The FICA tax rate is 15.3%, split evenly between employees and employers, with 12.4% going toward Social Security tax and the remaining 2.9% for Medicare.

Paychecks, also called payroll checks, are checks issued to employees for working. The amount of a paycheck is the employee’s net pay, or gross pay minus payroll deductions. Gross pay, also called gross wages, is the total amount an employee earns before payroll deductions.

State Unemployment Tax Act (SUTA) taxes

Gross pay is the total paid to an employee each pay period before any deductions for taxes or other purposes are made. It’s determined in different ways for salaried and hourly employees. Employees may edit their addresses and submit updated income tax withholdings forms through the portal.

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Businesses can run payroll manually or outsource the task to payroll software or an accounting firm. Under this law, employers are required to notify employees at least 60 days before a plant closing or other type of mass layoff. When hiring independent contractors, employers must be able to provide proof, or reasonable basis, that the contractor label is actually justified. The individual retirement account (IRA) offers employees greater control over their retirement savings.

Federal Insurance Contributions Act (FICA) taxes

Payroll is the process of paying the company’s employees after calculating their due amount. Processing payroll involves the employees’ names, wages, hours worked, deductions, benefits, and taxes. Some of the terms that are used in this process are as follows. Overtime is calculated differently for hourly and salaried employees. Most salaried employees are exempt from overtime, but your business may be required to pay overtime to some lower-paid exempt employees.

An essential part of the process is holding a portion of each employee’s earnings and making tax payments on their behalf. In addition, employers are responsible for employer taxes, paid using business funds separate from employee compensation. If you are either registered for GST accrued expenses recognize expenses incurred before paying or withhold taxes from an employees wage, then you will need to submit and remit payment of your Business Activity Statement (BAS). A business activity statement is usually completed and submitted on a quarterly basis but some organisations may need to complete more frequently.

Unlike employees, employers aren’t allowed to dictate how or when contractors complete their work. EFTPS stands for the Electronic Federal Tax Payment System, which is a free system offered by the U.S. ACH (Automated Clearing House) – This is an electronic network for processing direct deposits and other payroll transactions. This is an electronic network for processing direct deposits and other payroll transactions.

Here are the top-line payroll terms you’ll hear as a small business owner. Payroll might not be a foreign country, but new small business owners should nonetheless familiarize themselves with these standard payroll terms and abbreviations. As an employer, staying payroll compliant requires your full attention.

Reasonable Basis

Fringe benefits are additions to compensation that can be offered to employees. Some employers choose to offer these benefits universally to all employees, while others award them to high-level employees as an additional incentive. Withholding – Subtract amounts from an employee’s wages for taxes, garnishments or levies and other deductions (like medical insurance or union dues). These amounts are paid over to the government agency or other party to whom they are owed.