Preparing
Payroll Records
Chapter 13
Paying Employees p. 304
 Salary
– the money paid for employee
service
 Pay period – the period covered by a
salary payment
 Payroll – The total amount earned by all
employees for a pay period
 Must be reduced by state and federal
taxes and other deductions
 Payroll records used to:
 Record
payroll
 Provide annual records to employees
Preparing Payroll Time
Cards
Lesson 13-1
Page 304
Analyzing Time Cards
 Time
cards used as basic source of information
to prepare payroll
 Omni uses a time clock to record daily arrival
and departure times
 Look at Rick E. Selby’s time card
 Three sections: Morning, Afternoon, Overtime

Arrival, lunch, left for the day
Calculating EE Hours Worked
1.
Calculate regular hours
Departure Time
12:01
12:00
-
Arrival Time
7:55
8:00
=
=
=
Hours Worked
4:00
*ROUND TO THE NEAREST QUARTER HOUR
2.
3.
Calculate overtime hours
Total regular hours, Total overtime hours
Calculating EE Total Earnings

1.
2.
Total Earnings – total pay due for a pay period
before deductions
Enter regular rate
Calculate the regular earnings
Regular Hours
88
1.
x
x
2.
=
=
Regular Earnings
$1,056.00
Enter overtime rate (1.5 times regular rate)
Regular Rate
$12.00
1.
Regular Rate
$12.00
x
x
1.5
1.5
=
=
Overtime Rate
$18.00
Calculate overtime
Add the amount column to calculate total
earnings
Complete 13-1 WT & OYO
Page 307
Determining Payroll Tax
Withholding
Lesson 13-2
Page 308
Payroll Taxes
 Payroll
Taxes – taxes based on the payroll of a
business



Based on employee total earnings
Penalty for failure to pay correct taxes when due
LIABILITY for employer until payment is made to the
government
 Employee



Income Tax
Business must withhold federal income tax
Forwarded periodically to the federal government
State and city income tax can also be withheld
How many of you have a job?
 Form
o
W-4
Determines the amount of tax to withhold
EE’s Withholding Allowance
 Withholding
Allowance – a deduction from
total earnings for each person legally
supported by a taxpayer, including the
employee
 Married employee has less withheld than single

The more allowances the less tax withheld
 EXEMPT
 Fill
– low-income and part-time employees
out a federal W-4 and CT W-4 form
EE Income Tax Withholding
 Withholding
table on page 310 and 311
 Different table for various payroll periods

Monthly, semimonthly, biweekly, weekly, and
daily
 Revised

each year
Current tax table (http://www.irs.gov/pub/irs-pdf/p15.pdf)
 Determine
Rick E. Selby’s tax withholding
using the table on page 311 then using the
website above.
EE Social Security and
Medicare Tax
 Social
Security tax – federal tax paid for oldage, survivors, and disability insurance
 Medicare tax – federal tax paid for hospital
insurance
 Tax base – max amount of earnings that can be
taxed (current tax base http://www.ssa.gov/oact/COLA/cbb.html)
Calculating Social Security tax
Total
Earnings
$1,137.00
x
SS Tax
Rate
=
SS Tax
Deduction
x
6.5%
=
$73.91
*Amounts taken from Rick E. Selby’s time card on page 306 and
page 312
Calculating Medicare tax
Total
Earnings
$1,137.00
x
Medicare
Tax Rate
=
Medicare Tax
Deduction
x
1.5%
=
$17.06
*Amounts taken from Rick E. Selby’s time card on page 306 and
page 312
Complete 13-2 WT & OYO
Page 313
Preparing Payroll Records
Lesson 13-3
Page 314
Payroll Register
 Payroll
Register – a business form used to
record payroll information
 Summarizes the payroll for one pay period and
shows:
 total
earnings
 payroll withholdings
 Net pay
Preparing a Payroll Register
1.
2.
3.
Date (last date of semimonthly payroll) at
top, left of Register
Date of payment at top, right of Register
Employee information
1.
2.
3.
4.
Number
Name
Marital Status
Number of Allowances
Look at Rick E. Selby on line 5
Preparing a Payroll Register (con’t)
4.
Enter earnings from time card
1.
2.
3.
5.
6.
7.
8.
9.
Regular
Overtime
Total
Enter Deductions: Fed Income Tax
Enter Deductions: SS Tax
Enter Deductions: Medicare Tax
Enter Deductions: Health Insurance Premiums
Enter Deductions: Other Deductions (United Way
for RES)
Look at Rick E. Selby on line 5
Preparing a Payroll Register (con’t)
10.
Add deductions in column 9
FIT + SS Tax + Medi Tax + Health Ins. + Other = Total
11.
Determine Net Pay (total earnings paid after payroll
taxes and other deductions)
Total earnings - Total Deductions = Net pay
12.
Total, prove, and rule the payroll register
Total earnings - Total Deductions = Net pay
13.
Payroll Checks are written after calculations
are verified and a partner approves the
payroll. Write the check number in the
appropriate column of the register.
Employee Earnings Record
 Quarterly
Reports sent to federal and state
government showing EE taxable earnings and
taxes withheld from EE earnings


Called EE Earnings Record
Earnings and deductions for each pay period are
summarized on one line of the EE earnings record
Look at Rick E. Selby’s earnings record on page 316
Preparing an EE Earnings Record
1.
2.
Date of last day of quarter on top, right
Enter EE:
1.
2.
3.
4.
5.
6.
7.
3.
Number
Name
Marital Status
Withholding Allowances
Hourly Rate
SS Number
Position
Fiscal year accumulated earnings
Preparing an EE Earnings Record
(con’t)
4.
5.
Last day of pay period being recorded
Enter EE:
1.
2.
3.
6.
Earnings
Deductions
Net Pay
Calculate Accumulated Earnings:
Accum Earnings
as of 12/1
+
7.
Total Earnings
for Pay Per. End
12/15
=
Accum Earnings
as of 12/15
Total and prove the earnings for each EE
Total Earnings
-
Total Deductions
=
Net Pay
Other Notes
 Net
pay calculated in step 7 is compared
to the total of the Net Pay column
 Total
earnings (not net pay) are added to
the previous accumulated earnings
amount on the earnings record.
Complete 13-3 WT & OYO
Page 318
Preparing Payroll Checks
Lesson 13-4
Page 319
Payroll Bank Account
 Entirely

separate bank account
Protects & controls payroll payments
 General
bank account check written for
exact payroll amount each pay period &
deposited into payroll bank account
Preparing a check for total net
pay
1.
Check stub FIRST
1.
2.
3.
4.
2.
Date of check
Amount from PR Register
Payable to Payroll Account 006863274
For: pay period
Prepare check and sign
 Deposited
into payroll checking account
EE’s Payroll Check
 Information
taken from payroll register
 Similar procedure for preparing personal checks
 EE keeps stub for their record