Payroll

In a company

Company

A company is a form of business organization.In the United States, a company is a corporation—or, less commonly, an association, partnership, or union—that carries on an industrial enterprise." Generally, a company may be a "corporation, partnership, association, joint-stock company,...

, payroll is the sum of all financial

FINANCIAL

FINANCIAL is the weekly English-language newspaper with offices in Tbilisi, Georgia and Kiev, Ukraine. Published by Intelligence Group LLC, FINANCIAL is focused on opinion leaders and top business decision-makers; It's about world’s largest companies, investing, careers, and small business. It is...

 records of salaries, wage

Wage

A wage is a compensation, usually financial, received by a worker in exchange for their labor.Compensation in terms of wages is given to worker and compensation in terms of salary is given to employees...

s, bonuses and deduction

Deduction

Deduction: an argument or reasoning process in which the conclusion follows from the premises with logical necessity* Deductive reasoning, inference in which the conclusion is of no greater generality than the premises...

s.

A paycheck, is traditionally a paper document

Cheque

A cheque, also spelled check , is a negotiable instrumentAlthough cheques are regulated in most countries as negotiable instruments, in many countries they are not actually negotiable, viz., the payee cannot endorse the cheque in favour of a third party...

 issued by an employer to pay

Income

Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...

 an employee for services rendered. In recent times, the physical paycheck has been increasingly replaced by electronic direct deposit

Direct deposit

Direct deposit is a banking term used to refer to certain systems used to transfer money, namely:* In Europe, the giro system* In the United States, the Automated Clearing House...

 to bank accounts.

In most countries with a developed wire transfer

Wire transfer

Wire transfer or credit transfer is a method of transferring money from one person or institution to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office.- Process :...

 system, using a physical check for paying wages and salaries has been uncommon for the past several decade

Decade

A decade is a period of ten years. The word is derived from the late Latin decas, from Greek decas, from deca. The other words for spans of years also come from Latin: lustrum , century , millennium . The term usually refers to a period of ten years starting at a multiple of ten...

s.

In a company

Company

A company is a form of business organization.In the United States, a company is a corporation—or, less commonly, an association, partnership, or union—that carries on an industrial enterprise." Generally, a company may be a "corporation, partnership, association, joint-stock company,...

, payroll is the sum of all financial

FINANCIAL

FINANCIAL is the weekly English-language newspaper with offices in Tbilisi, Georgia and Kiev, Ukraine. Published by Intelligence Group LLC, FINANCIAL is focused on opinion leaders and top business decision-makers; It's about world’s largest companies, investing, careers, and small business. It is...

 records of salaries, wage

Wage

A wage is a compensation, usually financial, received by a worker in exchange for their labor.Compensation in terms of wages is given to worker and compensation in terms of salary is given to employees...

s, bonuses and deduction

Deduction

Deduction: an argument or reasoning process in which the conclusion follows from the premises with logical necessity* Deductive reasoning, inference in which the conclusion is of no greater generality than the premises...

s.

Paycheck

A paycheck, is traditionally a paper document

Cheque

A cheque, also spelled check , is a negotiable instrumentAlthough cheques are regulated in most countries as negotiable instruments, in many countries they are not actually negotiable, viz., the payee cannot endorse the cheque in favour of a third party...

 issued by an employer to pay

Income

Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...

 an employee for services rendered. In recent times, the physical paycheck has been increasingly replaced by electronic direct deposit

Direct deposit

Direct deposit is a banking term used to refer to certain systems used to transfer money, namely:* In Europe, the giro system* In the United States, the Automated Clearing House...

 to bank accounts.

In most countries with a developed wire transfer

Wire transfer

Wire transfer or credit transfer is a method of transferring money from one person or institution to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office.- Process :...

 system, using a physical check for paying wages and salaries has been uncommon for the past several decade

Decade

A decade is a period of ten years. The word is derived from the late Latin decas, from Greek decas, from deca. The other words for spans of years also come from Latin: lustrum , century , millennium . The term usually refers to a period of ten years starting at a multiple of ten...

s. However, vocabulary referring to the figurative "paycheck" does exist in some languages, like German

German language

German is a West Germanic language, thus related to and classified alongside English and Dutch. It is one of the world's major languages and the most widely spoken first language in the European Union. Around the world, German is spoken by approximately 105 million native speakers and also by...

 (Gehaltsscheck), partially due to the influence of US popular media, but this commonly refers to a payslip or stub rather than an actual check. Some company payrolls have eliminated both the paper check and stub, in which case an electronic image of the stub is available on an Internet website.

Payroll taxes

Federal/national, state/provincial, and/or local agencies require employers to perform various payroll functions, such as withholding amounts from employees' compensation to cover income tax

Income tax

An income tax is a tax levied on the income of individuals or business . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate tax,...

, Social Security

Social Security (United States)

Social Security in the United States currently refers to the federal Old-Age, Survivors, and Disability Insurance program....

, and Medicare

Medicare (United States)

Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over, or who meet other special criteria. The medicare program also funds residency training programs for the vast majority of physicians in the...

.

Payroll taxes are levied by government agencies on employees' wages, tips, and other compensation. The amounts withheld by employers from employees' pay for federal income, social security, and Medicare taxes are considered to be trust-fund taxes, because the money is held in a special trust fund for the U.S. government. Amounts withheld for state and local income taxes are held in trust for the state and local governments.

Pay slip

A pay stub, paystub, pay slip, pay advice, or sometimes paycheck stub, is a document an employee receives either as a notice that the direct deposit transaction has gone through, or as part of their paycheck. It will typically detail the gross income and all taxes

Withholding tax

Withholding tax is an amount withheld by the party making a payment to another and paid to the taxation authorities. The amount the payer deducts may vary, depending on the nature of the product or service being paid for. The payee is assessed on the gross amount, and the tax to be withheld is...

 and any other deductions

Itemized deduction

Itemized deduction is an eligible expense that individual taxpayers in the United States can report on their Federal income tax returns in order to decrease their taxable income....

 such as retirement plan

Pension

In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. It is a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income...

 contributions, insurance

Insurance

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known...

s, garnishment

Garnishment

A garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party to pay money, otherwise owed to the defendant, directly to the plaintiff...

s, or charitable contributions taken out of the gross amount to arrive at the final net amount of the pay, also including the year to date totals in some circumstances.

Payroll card

For employees that, for one reason or another, do not have access to a bank account (bad check history, not in close proximity to bank, etc), there is a solution, offered by most major Payroll Service Providers. Instead of an employee receiving a check, and paying up to 5-10% to cash the check, the employee can have the direct deposit loaded onto a debit card. In this, a company can save money on printing checks, not buy the expensive check stock, and not having to worry about check fraud, due to a check being lost or stolen.
A payroll card is a plastic card allowing an employee to access their pay by using a debit card

Debit card

A debit card is a plastic card that provides an alternative payment method to cash when making purchases. Functionally, it can be called an electronic cheque, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card...

. A payroll card can be more convenient than using a check casher, because it can be used at participating automatic teller machines to withdraw cash, or in retail environments to make purchases. Some payroll cards are cheaper than payday loan

Payday loan

A payday loan is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card...

s available from retail check cashing stores, but others are not. Most payroll cards will charge a fee if used at an ATM more than once per pay period.

The payroll card account may be held as a single account in the employer's name. In that case, the account holds the payroll funds for all employees using the payroll card system. Some payroll card programs establish a separate account for each employee, but others do not.

Many payroll cards are individually owned dda (demand deposit accounts) that are owned by the employee. These cards are more flexible, allowing the employee to use the card for paying bills, and the accounts are portable. Most payroll card accounts are FDIC-insured, but some are not.

Payroll Frequencies

Companies typically generate their payrolls on regular intervals, for the benefit of regular income to their employees. The regularity of the intervals, though, varies from company to company, and sometimes between job grades within a given company.
Common payroll frequencies include: daily, weekly, bi-weekly (once every two weeks), semi-monthly (twice per month), and to somewhat of a lesser extent, monthly. Less common payroll frequencies include: 4-weekly (13 times per year), bi-monthly (once every two months), quarterly (once every 13 weeks), semi-annually (twice per year), and annually.

Payroll Professionals

In Canada, Payroll Professionals are Certified by the Canadian Payroll Association. They are qualified as either 'Payroll Compliance Practitioners (PCP)' or as 'Certified Payroll Managers(CPM)'.

In the United States, Payroll Professionals are Certified by the American Payroll Association

American Payroll Association

The American Payroll Association is a professional association for individuals responsible for processing company payrolls. The Association conducts payroll training courses and seminars yearly and publishes a library of payroll resource texts and newsletters...

. They are designated as Fundamental Payroll Certification (FPC) or Certified Payroll Professional

Certified Payroll Professional

The Certified Payroll Professional designation is an exam-based payroll certification attained by individuals who possess a high level of professional competency through both the acquisition of knowledge and direct payroll experience....

 (CPP) after passing the appropriate certification exam.

Upon completion of the required course material and with continuing education and membership fees the person is then entitled to the post-nominal letters

Post-nominal letters

Post-nominal letters, also called post-nominal initials or post-nominal titles, are letters placed after the name of a person to indicate that the individual holds a position, educational degree, accreditation, office, or honour. An individual may use several different sets of post-nominal letters...

 associated with their current level of accomplishment.

In the United Kingdom, payroll professionals are represented by the Institute of Payroll Professionals

Institute of Payroll Professionals

The Institute of Payroll Professionals is a professional body representing payroll professionals in the United Kingdom.*1985 Institute of British Payroll Management formed...

.http://www.payrollprofession.org

Warrants

Payroll warrants look like checks

Cheque

A cheque, also spelled check , is a negotiable instrumentAlthough cheques are regulated in most countries as negotiable instruments, in many countries they are not actually negotiable, viz., the payee cannot endorse the cheque in favour of a third party...

 and clear through the banking system like checks, but are not drawn against cleared funds in a deposit account

Deposit account

A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...

. Instead they are drawn against "available funds" that are not in a bank account, so the issuer can collect interest on the float. In the US, warrants are issued by government entities such as the military and state and county governments. Warrants are issued for payroll to individuals and for accounts payable to vendors. Technically a warrant is not payable on demand and may not be negotiable. Deposited warrants are routed to a collecting bank which processes them as collection item

Collection item

Collection item is a banking term for an item presented for deposit, such as a check, that cannot be credited to a depositor's account until payment has been received from the payor bank or from a government treasurer...

s like maturing treasury bills and presents the warrants to the government entity's Treasury Department for payment each business day.

In the UK

United Kingdom

The United Kingdom of Great Britain and Northern Ireland is a sovereign state located off the northwestern coast of continental Europe. It is an island country, spanning an archipelago including Great Britain, the northeastern part of Ireland, and many small islands...

, warrants are issued as payment by the NS&I

National Savings and Investments

National Savings and Investments , formerly called the National Savings Bank, is a state-owned savings bank in the United Kingdom. It is an executive agency of HM Treasury...

when a Premium Bond

Premium Bond

A Premium Bond is a lottery bond issued by the United Kingdom government's National Savings and Investments scheme. The government promises to buy back the bond, on request, for its original price. They were introduced by Harold Macmillan in his 1956 budget....

is chosen.

Payroll Outsourcing

Businesses may decide to outsource their payroll functions to an outsourcing service like a payroll bureau or a fully managed payroll service. These can normally reduce the costs involved in having payroll trained employees in-house as well as the costs of systems and software needed to process payroll. Within the United States, business payrolls are complicated in that taxes must be filed consistently and accurately to applicable regulatory agencies. Restaurant payrolls which typically include tip calculations, deductions, garnishments and other variables can be extremely difficult to manage especially for new or small business owners.

In the UK, payroll bureaus will deal with all HM Revenue & Customs enquiries and deal with employee's queries. Payroll bureaus also produce reports for the businesses' account department and payslips for the employees and can also make the payments to the employees if required.

Another reason many businesses outsource is because of the ever increasing complexity of payroll legislation. Annual changes in tax codes, PAYE and National Insurance bands as well as more and more statutory payments and deductions having to go through the payroll often mean there is a lot to keep abreast of in order to maintain compliance with the current legislation.