Payroll: Payroll is all the financial records and data related to salaries, wages, overtime, bonuses,

deductions, withholdings, garnishments related to the entities, employees, owners or partners aid for
services provided during a specific period of time.
Employee: In this guide the term employee strictly means a W2 recipient regardless of how he or she is
defined under various statues.
W-2 Form: An official Internal Revenue Service tax form used by the employers (regardless of whether
they are tax exempt or not) to report wages paid by employers to their employees and taxes withheld in
accordance with the applicable tax code for the particular tax year. It may also include other deductions
such as health insurance, 401K and other related items. Employers are required under the law to file the
W2 forms with Social Security Administration before the deadline in place every year.
W-3 Form: An official Internal Revenue Service tax form used by the employers (regardless of whether
they are tax exempt or not) that summarizes most of the data reported on individual W2 forms. Currently
each employer files one W3 (regardless of the number of W2 forms filed) along with the W2 forms filed
with the Social Security before the deadline every year.
W-4 Form: An official Internal Revenue Service tax form used by the employers, prepared and signed by
the employees to collect vital tax data from employees like :their filing status and number of allowances,
to help the employer withhold the accurate amount of Federal taxes from employees earnings as required
by the applicable tax laws. Employers should keep a signed copy on file for each employee, and are
encouraged to update the form annually, or when changes in the number of allowances occur.
941 Form: An official Internal Revenue Service tax form used by the employers (regardless of whether
they are tax exempt or not). The form summarizes wages paid, Federal payroll taxes withheld, Social
Security taxes, Medicare taxes, and other related payments and withholdings to the Internal Revenue
Service at the end of every quarter.
940 Form: An official Internal Revenue Service tax form used by the employers that summarizes wages
paid and Federal Unemployment Taxes accrued on wages subject to Federal Unemployment Tax (FUTA)
for the entire tax year. The form is filed annually before the official deadline.
944 Form: An official Internal Revenue Service tax form used by the employers (regardless of whether
they are tax exempt or not) that summarizes wages paid, Federal payroll taxes withheld, Social Security
taxes, Medicare taxes, and other related payments and withholdings to the Internal Revenue Service at
the end of every year (mostly used by smaller employers).
A pay cheque, also spelt pay check, is traditionally a paper document (a cheque) issued by an
employer to pay an employee for services rendered. In recent times, the physical paycheck has
been increasingly replaced by electronic direct deposits to the employee's designated bank
account or loaded onto a payroll card. Employees may still receive a pay slip to detail the
calculations of the final payment amount.

A payslip, pay stub, paystub, 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 is
attached to the paycheck. Each country has laws as to what must be included on a pay slip, but
which would typically include details of the gross wages for the pay period and the taxes and any
other deductions the employer is required to make by law; as well as other personal deductions
such as retirement plan or pension contributions, insurances, garnishments, 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.
Benefits:

Retirement plans may be classified as defined benefit or defined contribution according to how
the benefits are determined.[9] A defined benefit plan guarantees a certain payout at retirement,
according to a fixed formula which usually depends on the member's salary and the number of
years' membership in the plan. A defined contribution plan will provide a payout at retirement
that is dependent upon the amount of money contributed and the performance of the investment
vehicles utilized. Hence, with a defined contribution plan the risk and responsibility lies with the
employee that the funding will be sufficient through retirement, whereas with the defined benefit
plan the risk and responsibility lies with the employer or plan managers.

Some types of retirement plans, such as cash balance plans, combine features of both defined
benefit and defined contribution plans. They are often referred to as hybrid plans. Such plan
designs have become increasingly popular in the US since the 1990s. Examples include Cash
Balance and Pension Equity plans.

A traditional defined benefit (DB) plan is a plan in which the benefit on retirement is determined
by a set formula, rather than depending on investment returns.

In a defined contribution plan, contributions are paid into an individual account for each member.
The contributions are invested, for example in the stock market, and the returns on the
investment (which may be positive or negative) are credited to the individual's account. On
retirement, the member's account is used to provide retirement benefits, sometimes through the
purchase of an annuity which then provides a regular income. Defined contribution plans have
become widespread all over the world in recent years, and are now the dominant form of plan in
the private sector in many countries

Payroll warrants : Payroll warrants look like cheques and clear through the banking
system like checks and are therefore often called paychecks by their recipients. But
they are not checks because they are not drawn against a checking account.
Instead they are drawn against "available funds" that are not in a bank account so
the issuer can delay redemption. In the U.S., warrants are issued by government
entities such as the military and state and county governments for payroll to
individuals and for accounts payable to vendors. [2] Deposited warrants are routed to
a collecting bank which processes them as collection items like maturing treasury
bills and presents the warrants to the government entity's treasury department for
payment each business day.

The most common frequencies in the U.S. are monthly, semi-monthly (twice a
month), biweekly (every two weeks) and weekly. State laws typically require a
minimum pay period -- you can always pay more frequently but not less. Each
pay schedule has advantages and disadvantages, so lets take a look at the
differences between semi-monthly and biweekly, the two most popular options.

Semi-monthly vs. biweekly payroll. The differences may seem minor. After
all, they sound the same and there are only two extra checks for biweekly (26)
versus semi-monthly (24). While most employees prefer being paid more
frequently, there are pros and cons to either pay period for both employer and
employee.

Related: 4 Tools That Take the Pain Out of Managing Payroll

An active employee is any employee you have not terminated or made inactive, whether or not
you pay them on any particular payroll. If they were active for any part of the month, they will
be included in your employee count when computing your monthly charge. You can easily change
employees from active to inactive as needed, or terminate and reinstate them. Inactive
employees don't show up on the 'Pay Employees' screen, but their information is still in the
system.

A leave of absence (LOA) is a period of time that one must be away from one's
primary job, while maintaining the status of employee. This contrasts with normal
periods away from the workplace, such as vacations, holidays, hiatuses, sabbaticals,
and "working from home" programs, in that they are considered exceptional
circumstances, rather than benefits. Generally such an arrangement has a
predefined termination at a particular date or after a certain event has occurred.

Paid Leave : Generally, paid leaves of absence are given at the request of the
employer, or per some statutory or contractual requirement. Some examples of
generally paid LOA include employee injury on the job, bereavement, jury duty, or if
the employer is performing repairs or other activities in the building where the
employee normally works which prevents them from performing their duties.

Unpaid leave[edit]

Unpaid LOAs are generally at the request of the employee or as a result of suspected misconduct
on the part of the employee. A leave of absence may be obtained for a variety of employee-
requested reasons, including active duty call-ups for reserve military personnel, or to attend to
the health needs of the employee or of a family member of the employee.

In many jurisdictions, it is up to the employer's discretion as to whether or not an employee's

request for a leave of absence is approved. In the United States, the Family and Medical Leave
Act of 1993 defines certain circumstances under which approval of a leave of absence is
compulsory. Additionally, the Uniformed Services Employment and Reemployment Rights Act
(USERRA) dictates certain circumstances under which a LOA must be granted.

BENEFITS:

Below is a list of benefit services we offer all of our clients:

Health Insurance
Dental Insurance
Supplemental Insurance
Supplemental Medicare Plan Options
Educational Seminars & Enrollment Meetings
On-line Enrollment and Administrative Tracking for Large Group Clients
Health & Wellness Educational Seminars
High Deductible Health Care Administration
Health Savings Account Services
FSA : Flexible Spending Accounts (FSAs), also known as reimbursement accounts, are optional
benefits plans offered by many U.S. employers that allow employees to set aside money from
their paychecks on a pretax basis to pay for eligible out-of-pocket medical and dependent care
expenses.
There are two types of FSAs one is for health care-related expenses and the other is for
dependent care-related expenses. These two accounts are separate. You may sign up for either or
both of them during the open enrollment period, but it's important to note that money set aside in
one account cannot be used to pay for expenses from the other.

You can enroll in an FSA only during your company's open enrollment period unless you have a
qualified "family status change" during the year such as marriage, birth or adoption, divorce, or
loss of a spouse's insurance coverage. The contribution amount(s) you designate for the year will
be deducted from your paycheck each month (or each pay period check your employer's plan
for details).

How Pretax Contributions Work

The IRS allows participants to contribute to their FSA account(s) through payroll deductions
taken out on a pre-tax basis. This means the money is deducted from your pay before federal and
state income taxes and Social Security have been withheld. Thus, your taxable income is
lowered, which in turn reduces the amount of taxes you must pay.

By contributing to an FSA to cover expenses you would have paid for anyway, you reduce your
gross taxable income by that amount, which in turn lowers your tax bill. For example, say you
earn $35,000 a year and are in the 25 percent marginal tax rate. You decide to put $1,000 in the
Health Care FSA and $3,000 in the Dependent Care FSA. This would lower your gross income
by $4,000 and in turn reduce your taxes by $1,000. That's $1,000 that stays in your pocket
instead of going to Uncle Sam.

The more you contribute to FSAs, the greater your potential tax savings. Just be sure that you
calculate your expected expenses carefully, because according to IRS rules, any funds in your
account not used during that plan year might have to be forfeited (see Tax Rules that Govern
FSAs below).

COBRA : The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who
lose their health benefits the right to choose to continue group health benefits provided by their group health
plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction
in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be
required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the
prior year offer employees and their families the opportunity for a temporary extension of health coverage
(called continuation coverage) in certain instances where coverage under the plan would otherwise end.

COBRA outlines how employees and family members may elect continuation coverage. It also requires
employers and plans to provide notice.
The Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA) requires most employers with group
health plans to offer employees the opportunity to continue temporarily their
group health care coverage under their employers plan if their coverage otherwise
would cease due to termination, layoff, or other change in employment status
(referred to as qualifying events).
How long must COBRA continuation coverage be available to a qualified
beneficiary?

Up to 18 months for covered

employees, as well as their spouses and their dependents, when workers
otherwise
would lose coverage because of a termination or reduction of hours.
Up to 29 months is available
to employees who are determined to have been disabled at any time during the
first 60 days of COBRA coverage and applies as well to the disabled employees
nondisabled qualified beneficiaries.
Up to 36 months for spouses
and dependents facing a loss of employer-provided coverage due to an
employees
death, a divorce or legal separation, or certain other qualifying events.

The qualifying event requirement

is satisfied if the event is (1) the death of a covered employee; (2) the
termination
(other than by reason of the employees gross misconduct), or a reduction
of
hours, of a covered employees employment; (3) the divorce or legal
separation
of a covered employee from the employees spouse; (4) a covered
employee becoming
entitled to Medicare benefits under Title XVIII of the Social Security Act;
or (5) a dependent child ceasing to be a dependent child of the covered
employee
under the generally applicable requirements of the plan and a loss of
coverage
occurs.

Who is a Qualified Beneficiary?

Under the statute, a qualified
beneficiary is someone who is a beneficiary under the plan (i.e.,
is covered under the plan) immediately prior to the qualifying event and who
is:

The spouse or dependent

child of a covered employee.
A covered employee
(but only if the qualifying event is a termination or reduction in hours
of the covered employees employment.

FMLA :The FMLA entitles eligible employees of covered employers to take unpaid,
job-protected leave for specified family and medical reasons with continuation of
group health insurance coverage under the same terms and conditions as if the
employee had not taken leave. Eligible employees are entitled to:

Twelve workweeks of leave in a 12-month period for:

o the birth of a child and to care for the newborn child within one year of
birth;

o the placement with the employee of a child for adoption or foster care and
to care for the newly placed child within one year of placement;

o to care for the employees spouse, child, or parent who has a serious
health condition;

o a serious health condition that makes the employee unable to perform the
essential functions of his or her job;

o any qualifying exigency arising out of the fact that the employees spouse,
son, daughter, or parent is a covered military member on covered active duty; or

Twenty-six workweeks of leave during a single 12-month period to care for a

covered servicemember with a serious injury or illness if the eligible employee is
the servicemembers spouse, son, daughter, parent, or next of kin (military
caregiver leave).

401 k: By definition, a 401(k) plan is an arrangement that allows an employee to choose

between taking compensation in cash or deferring a percentage of it to a 401(k) account
under the plan. The amount deferred is usually not taxable to the employee until it is
withdrawn or distributed from the plan. However, if the plan permits, an employee can make
401(k) contributions on an after-tax basis (these accounts are known as Roth 401(k)s), and
these amounts are generally tax-free when withdrawn. 401(k) plans are a type of retirement
plan known as a qualified plan, which means that this plan is governed by the regulations
 stipulated in the Employee Retirement Income Security Act of 1974 and the tax code.
Qualified plans can be divided two different ways: they can be either defined-contribution or
defined-benefit (pension) plans. 401(k) plans are a type of defined-contribution plan, which
means that a participant's balance is determined by contributions made to the plan and the
performance of plan investments. The employer is usually not required to make
contributions to the plan, as is usually the case with a pension plan. However, many
employers choose to match their employees' contributions up to a certain percentage,
and/or make contributions under a profit-sharing feature.

The most common types of employer-sponsored retirement savings plans are called 401(k),
403(b) or 457 plans so named for the Internal Revenue Service tax codes that govern them
and Thrift Savings Plans. Each has a different target audience:

401(k) plans are offered to employees of public or private for-profit companies.

403(b) plans are offered to employees of tax-exempt or non-profit organizations, such as

public schools, colleges, hospitals, libraries, philanthropic organizations and churches.

457 plans are offered to employees of state and local municipal governments (and some
local school and state university systems).

Thrift Savings Plans are offered to federal civilian and uniformed services employees.

These plans have many features in common, although contribution limits, vesting schedules for
employer-matching contributions, investment options and other details may differ, so be sure to
read the plan documents for your particular plan carefully.

Traditional 401(k)
Contributions are made on a pretax basis: an employer takes money out of a paycheck and
transfers it in the employee retirement plan before withholding taxes. When the employee begins
to take distributions, he/she will pay normal income tax on those distributions, and the income
tax will be based on the employees tax bracket at the time of the distribution.

Contributions are made after an employer withholds taxes. Because the employee
already paid taxes, he/she will not owe taxes on distributions. (However, if an
employee receives a company match on a Roth contribution, the company match is
a pre-tax contribution. The funds that result from company matches and the
associated growth will be subject to regular income tax when distributions are
drawn at retirement.) It is noteworthy to mention that employees never owe capital
gains taxes on any kind of 401(k) investments.

Traditional 401(k) = income taxes on distributions

Roth 401(k) = income taxes on contributions
Disability insurance is private insurance that replaces some of your income if an injury or illness prevents
you from working. Talk to your Human Resources department to see if your job offers STD or LTD
coverage as a benefit.

Disability insurance is important because it can ease the financial burden on a household when someone
has a serious illness or injury. The main difference between disability insurance and workers
compensation insurance is that for disability insurance, the injury or illness does not need to be work-
related.

There are two types of disability insurance:

Short-Term Disability (STD) pays you a portion of your income for a short period of time after you
run out of sick leave. Depending on your plan, STD generally will pay you for between 9 and 52
weeks (or 1 year).

Long-Term Disability (LTD) pays you a portion of your income after you run out of both sick leave
and STD. Depending on your plan, LTD may pay you for a specific number of years, like 2 years
or 5 years, or until you turn a specific age, like 65.

Income Tax in the USA

Currently the following payroll taxes are applicable:

Federal Withholding Payroll tax which includes Social Security and Medicare
taxes.
Federal Unemployment tax.
State Withholding Payroll tax (not applicable in all states).
State Unemployment tax or something similar depending on individual states.
Local taxes. (City or County taxes for example).

All 50 states have their own rules and regulations when it comes to tax. Between these states
there are literally thousands of local taxing jurisdictions therefore to find specific rules and
regulations go to www.americanpayroll.org and click on web links, state & local links for more
details.

Calculation example

This Tax calculation is based on a Single employee, paid bi-weekly with a $1000.00 per pay
period salary claiming one withholding allowance:

Federal Income Tax - $95.91, Social Security Tax - $62.00, Medicare Tax - $14.50
Social Security in the USA

Social Security Tax

Employee and Employer pay 6.2% on the first $118,500 in taxable wages.

Medicare Tax

Employee pays 1.45% on wages up to $200,000. Wages in excess of $200,000, employee pays
2.35%. Employer pays 1.45 % on all wages.

For federal taxes, most employers follow the semi-weekly deposit schedule rules which require
payments to be made within three to five banking days of the pay check date. For deposits over
$100,000, a special rule applies that requires payments to be made the following day. Go to
www.irs.gov and review IRS Publication 15 for a full explanation of the specifics rules to follow.

Penalties vary by taxing jurisdiction based on the number of days the payment is late. They can
range anywhere between 1% up to 25% of the outstanding tax balance. Late filing penalties and
interest charges may also apply.