The Choices For You In Payroll Accounting
The basic guide of payroll accounting will start on how to get the gross earned amount that is intended for the employee, and you will need to multiply the number of hours that an employee is working to the rate of payment of the company in order to get it. You can do this calculation once a month, every two weeks, or every week. There are some other procedures needed by the employer before the employee will get the actual check.
The withholdings and the taxes should first be retained from the actual paycheck before the employee will receive it. Once the money will be retained from the gross earnings, the employee will then receive the take home pay or the net income. There is a periodic change in the income brackets, formulas, and percentages of the IRS or Integral Revenue Services. For instance, the highest federal income bracket during the 1970s was 70 percent of the gross income.
The State and Federal taxes, Medicare, and Social Security are the items that will be withheld from the paycheck of an employee. The Medicare tax rate today is set at 1.45 percent and the tax rate in Social Security is at 6.2 percent of the gross rate of the employee. The federal income tax today is ranging from 10 to 35 percent that will be based on the income bracket where the employee falls into. While the state taxes will be different in each state, and there are 7 states that do not impose income tax. You can discover more about the state law in each state by searching in the internet.
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.
You need to know that the employer is required to retain some other documents. The documents that the employer needs to retain are the federal and state W-4s, the original employment application, time sheets, employee reviews, and a copy of the W-2 form of the employee.
Almost all of the things that you need to be aware of when it comes to calculating the 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. You should read this article in order for you to know more about the several factors and information regarding the 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.