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Your 2022 Payroll Cheat Sheet

Every business needs an efficient understanding of how Payroll works. Regardless of what industry you are in, having a Payroll Cheat Sheet can come in handy when dealing with one of the most crucial elements of a company.

What is Payroll?

The term Payroll encompasses all things involving payments to employees. For instance, this includes salaries, wages, bonuses & commissions, tracking hours, tips, taxes, deductions, employee information and much more.

Above all, these moving parts work together to paint the bigger picture of one of the biggest components of any operation. See below for our handy Payroll Cheat Sheet to help you navigate it all.

Manual Check Vs. Live Check

  • Manual Check: A check is created by a client outside of regular payroll processing. This check is either by hand, or by payroll software.
  • Live Check: Generally, an employee’s paycheck drawn on the employers bank account and included in payroll packages (as opposed to direct deposit).

Deductions vs. Exemptions

  • Deductions: An amount subtracted from a paycheck (like medical premiums, garnishments, 401K deferrals).
  • Exemptions: Tax withholding options elected by an employee on Form W-4.

Pre-Tax vs. Non-Taxable

  • Pre-tax: Deductions from pay before taxes are calculated (such as a traditional 401K deferral).
  • Non-taxable: Additions to an employee’s pay (like expense account reimbursements).

Net Pay vs. Gross Pay

  • Net Pay: Amount of pay post- all deductions and taxes.
  • Gross pay: Amount of pay prior to all deductions.

Semi-Monthly Pay Frequency vs. Semi Weekly Tax Depositor

  • Semi-Monthly Pay Frequency: This means employees receive pay twice a month.
  • Semi-Weekly Tax Depositor: This is referring to the employers tax payment frequency.  The term ‘semi-weekly’ can be misleading. An employer must make payroll tax deposits either monthly or ‘semi-weekly’ (after each and every payroll). The deposit date is based on the payroll check date.

Voided Check vs. Stop Payment

  • Voided Check: A check rendered null and void. To prevent cashing or depositing you can physically alter it by writing void on it. 2022 Payroll Cheat Sheet
  • Stop Payment: A notification to the bank to prevent cashing of specific check. This usually requires a fee.

Semi-Monthly vs. Bi- Weekly Pay Cycles

  • Semi-Monthly Pay Cycle: Pay twice a month (like the 1st and the 15th). Usually involves 24 pay periods.
  • Bi- Weekly Pay Cycle: Pay every other week (like every other Friday). Usually involves 26 pay periods.

Date of Hire vs. Length of Service

  • Date of Hire: The employee’s first day working with the company.
  • Length of Service: Time worked by the employee with adjustment of significant leaves of absences.

Pay Period vs. Tax Period

  • Pay Period: The legally specified length of time used to calculate employee hours worked. Typically, the pay period will end 3-7 days prior to the pay date.
  • Tax Period: Period of time to determine an employer’s tax liability.

Whether you’re part of a large or small organization, Payroll Service Providers are always useful for keeping track of everything. In addition to basic payroll processes, there is a tremendous amount of data generated by the payroll process, and utilizing this data, such as job costing & labor distribution information, to make business decisions is critical to most companies. Moreover, they work with their clients to ensure that their employees are paid on time and the employer stays in compliance.

Looking for a payroll service provider you can rely on?  Payroll Systems offers payroll solutions that are easy to scale and a dedicated payroll specialist to ensure your specific payroll needs are met. Talk to us to learn more.

 

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.