The Choices For You In Payroll Accounting
The basic guide of payroll accounting will start with the hours worked by a certain employee multiplied to the rate of payment in order to give the gross amount that is earned for the employee. You can do this calculation once a month, every two weeks, or every week. And there are still some other processes that will be needed by the employer before he or she can issue the actual check to the employee.
Some other factors like the withholdings and taxes will be retained from the paycheck before it will be given to the employees. The employee will receive his or her take home pay or net income right after the money will be retained from the gross earnings. The IRS or Integral Revenue Services will be having a periodic change in the formulas, percentages, and income brackets. For instance, the highest federal income bracket during the 1970s was 70 percent of the gross income.
The paycheck of an employee will be deducted with the fees from the Federal and State taxes, Medicare, and Social Security. The current Social Security tax rate is at 6.2 percent while the Medicare tax rate is set at 1.45 percent of the gross earnings of the employee. Depending on where the employee is in the income bracket, the federal income tax today is ranging from 10 to 35 percent. There will be various state taxes in each state, while there are 7 states that are not imposing income tax. You can search the internet in order to know more about the laws in each states.
There is an accrued tax that should be contributed and calculated by the employer every time he or she is figuring the payroll accounting. The employer should be paying a portion of the state unemployed tax and federal unemployed tax, a portion of the medicare, as well as a portion of social security.
There are also some documents that will need to be retained by the employer. These documents are the time sheets, employee reviews, original employment application, federal and state W-4s, and the copy of the W-2 form of the employee.
Most of the things that you will need to be aware of when it comes to the calculation of payroll taxes and withholdings can be found in circular E. You can look into the current issues about this by looking for more information about circular E in the internet. This article will serve as a guide on the answers and process when it comes to any questions you might have about payroll accounting. So in order for you to fully understand the whole process of payroll accounting, you should always remember all the important details and information that is connected in the calculation that will be needed for the payroll accounting.