Payroll Accounting
Non-discretionary bonus
a bonus normally based on hours worked, units produced, production efficiency, or work quality.
Discretionary bonus
a bonus not agreed on, announced, or promised before payment.
Personal allowance
a deduction allowed in computing taxable income; also known as a personal exemption.
Primary insurance amount (PIA)
a person's monthly retirement or disability benefit, which is the base upon which monthly benefits of the worker's family and survivors are computed.
Defined contribution plan
a retirement plan that provides future benefits based solely on the amount paid by each employee and employer into the account, plus investment gains.
Average indexed monthly earnings
a worker's average monthly earnings, updated to reflect changes in wage levels.
Supplemental wage payments
additional compensation such as vacation pay, bonuses, and commissions paid to employees.
Reciprocal arrangements
agreements between state to provide unemployment insurance coverage and payment of benefits to interstate workers.
Special withholding allowance
allowance claimed by employees so that wages which are below the level subject to the income tax will not be subject to withholding.
Backup withholding
amount of income tax withheld by payers of taxable interest, dividends, and certain other payments made to payees who have failed to furnish the payers with correct identification numbers.
Dismissal payment
amounts paid by employers to workers who have been separated from employment:also know as payments in lieu of notice, separation pay, or terminal leave pay.
Dependency allowance
an additional weekly benefit paid to unemployed workers with dependents.
Standard deduction
an amount of money used to reduce an individual's adjusted gross income in computing taxable income
Person
an entity defined by law as an individual, a trust or estate, a partnership, or a corporation.
Part-year employment
another method of calculation the withholding of federal income tax from an employee's pay
Employee
any individual performing services for an employer in the legal relationship of employer and employee.
Sick pay
any payment made to individuals because of their personal injury or sickness that does not constitute wages.
Employer
any person or organization who employs one or more individuals for the performance of services, unless such services or employment are specifically excepted by law.
De minimis fringe benefit
any property or service the value of which is so small that accounting for it would be unreasonable or impractical.
Employment
any service performed by employees for their employer, regardless of the citizenship or residence or either.
Piece-rate system
compensation plan under which workers are paid according to their output (units or pieces produced).
Profit-sharing plans
compensation plans in which employer shares with employees a portion of the profits of the business.
Employee history record
continuous record of the relationship between the employer and the employee.
Fully insured
criterion used to determine eligibility for most retirement and disability benefits' generally, a worker needs between 6 and 40 quarters of coverage.
Currently insured
criterion used to determine eligibility for social security benefits; persons must have at least six quarters of coverage during the 13-quarter period ending with (1) the quarter in which they died or (2) the quarter in which they become entitled to old-age insurance benefits or most recently become entitled to disability benefits.
Requisition for formula
experience-rating plan used in most states, based on; Contributions less Benefits Paid divided by Average Payroll.
Time card
form on which employee's time worked is recorded manually by the worker or automatically by a time clock.
Time sheet
form that indicates an employee's time of arrival and time of departure.
Hiring notice
form that is sent to the Payroll Department so that new employees are properly added to the payroll.
Form I-9 Employment Eligibility Verification
form that lists the documents an employee must furnish to the employer' they identify the employee and, if an alien, verify authorization to work in the United States.
Form W-2 Wage and Tax Statement
form used by the employer to report the amount of wages paid each worker in the course of the trade or business or the employer.
Partial unemployment notices
forms completed by the employer and given to partially unemployed workers so that supplemental unemployment benefits may be obtained.
Information returns
forms upon which an employer reports compensation paid to individuals who are not employees.
Gross-up supplementals
gross-ip amount of payment so that after the appropriate payroll taxes are withheld, the net amount left is equal to the original intended payment.
Payroll register
multicolumn form used to assemble and summarize the data needed at the end of each payroll period. it lists all employees who earned remuneration, the amount or remuneration, the deductions, and the net amount paid
Monthly depositor
one who reported employment taxes of $50,000 or less for the four quarters in the look back period.
semiweekly depositor
one who reported employment taxes of more than $50,000 for the four quarters in the look back period.
Earned income credit (EIC)
reduction in federal income taxes mostly for workers who have dependent children and maintain a household.
Executive orders
regulations issued by the federal government that ban, in employment on government contracts, discrimination based on race, color, religion, sex, or national origin.
Salary
remuneration paid on a monthly, biweekly, semimonthly, or yearly basis.
Constructively Paid
remunerations that are credited to the account of, or set apart for, an employee so that they may be drawn upon at any time, even though they are not actually possessed by the employee.
Safe harbor rule
rule that determines if an employer has satisfied the deposit obligations by (a) having no shortfall (under deposit) that exceeds the greater of $100 or 2 percent of the amount of employment taxes required to be deposited and (b) having deposited the shortfall on or before the shortfall make-up date.
Domestic service
services of a household nature performed in or bout a private home of the person who employees the domestic.
Commission
stated percentage of revenue paid an employee who transacts a piece of business or performs a service.
Common-law relationship
the state existing when the employer has the right to control both what work will be done and how it will be done.
Human resources system
those procedures and methods related to recruiting, selecting, orienting, training, and termination personnel.
Payroll accounting system
those procedures and methods related to the disbursement of pay to employees.
Principal activities
those tasks employees must perform for the employer.
Positive-balance employers
those who have built up a balance in their reserve accounts (contributions paid in less benefits charged).
Negative-balance employers
those whose reserve accounts have been charged for more benefits paid out than contributions paid in to the fund.
Gross earnings
total regular earnings and total overtime earnings, also known as gross pay.
Journal entries
transactions recorded in the accounting system of a business.
Semimonthly
twice a month
Pooled-fund laws
unemployment insurance system wherein the cost of unemployment benefits is spread among all employers in a particular state.
Indexing
updating, or adjusting, a dollar amount over any particular time period (such as a calendar year) to reflect changes in wage levels that have occurred since a predetermined base time period.
Check-off system
withholding of union dues from employees' wages by the employer.
Exempt employees
workers exempt form some, or all, of the FLSA requirements such as minimum wages, equal pay, and overtime pay.
Enterprise coverage
applied to determine if employees of an enterprise are covered under the provisions of the FLSA. the test criterial are at least two employees engaged in interstate commerce and an annual gross sales volume of at least $500,000.
Individual employee coverage
applied to determine if the FLSA covers an employee. the test is that the employee either engages in interstate commerce or produces goods for such commerce.
Reciprocal agreement
arrangement entered into by two or more states whereby the resident of one state working in another state will not be subject to the withholding of income taxes by the state in which the person is employed if that state has entered into a similar agreement with the employee's resident state.
Quarter of coverage
criterion used to determine if workers are fully insured, currently insured, r insured for disability benefits; the minimum amount of wages or self-employment income with which individuals must be credited in a calendar quarter if they are to receive credit toward being insured for that period
Change in payroll rate form
document that notifies the proper departments of a change in the employee's rate of remuneration.
Reference inquiry form
document used by the employer to investigate the references given on the application blank by the job applicant.
Partial unemployment
employment by the individual's regular employer on a reduced scale because of lack of work.
Biweekly
every two weeks
Status report
initial statement field by new employers with their state unemployment office, which determines their liability to make contributions into the state unemployment compensation fund.
Fair employment practices
laws that deal with discrimination on the basis of age, race, color, religion, gender, or national origin as a condition of employment.
Garnishment
legal or equitable procedure by means of which a portion of the wages of any person must be withheld for payment of a debt.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
legislation that gives qualified terminated employees the option of continued coverage (up to nine months) under the company's group health insurance plan.
Income tax
levy on the earnings of most employees that is deducted form their gross pay.
Group insurance
life insurance program for employees at a low cost.
Experience rating
method by which employer contribution payments may be adjusted because of a favorable employment record; also known as merit rating.
Merit rating
method by which employer contribution payments may be adjusted because of a favorable employment record; also known as merit rating.
Overtime premium
method of calculation overtime pay by multiplying the total hours worked (including overtime hours) by the regular rate of pay and then multiplying the overtime hours by one-half the regular hourly rate.
Annualizing wages
method of determining amount of income taxes to be withheld by multiplying the wages for one payroll period by the number of periods in the year, determining the annual amount of withholding required on the total wages, and dividing the annual withholding by the number of payroll periods.
Percentage method
method of determining amount of income taxes to be withheld using Table of Allowance Values and Percentage Method Withholding Table
Quarterly averaging
method of determining the amount of income taxes to be withheld by estimation the employee's average wages for the calendar quarter, computing an average payment, and withholding an amount based on the average payment.
Continental System
method of recording time on time cards in which the day is divided into one 24-hour period, with time running form 12 midnight to 12 midnight.
Disability allowance
payment to employees who are absent form their job because of illness, accident, or disease not arising out of their employment.
Social security benefits
payments made under Title II of the Social Security Act to retired workers, their spouses, children and parents, as well as widows, widowers, and some divorced persons;also known as OASDI benefits and Title II benefits.
Employee's earnings record
payroll record for each employee that is used to provide complete information about the accumulated earnings of each employee.
Electronic pay stub
paystub information made available through a secured Web site, kiosk, or interactive voice response system
Application form
personnel record which gives the applicant an opportunity to provide complete information as to personal qualification, training, and experience.
Independent contractions
persons who follow an independent trade, business, or profession where services are offered to the public.
Supplemental Unemployment Benefits (SUB)
private supplementation of state unemployment compensation benefits to employees during periods of layoff.
Medicaid
program of medical assistance provided to aged and needy persons by means of a joint federal-state program.
Hospital insurance (HI) plan
program of medical care that provides protection against costs of certain hospital and related services; also known as Basic Medicare or Part A Medicare.
Supplementary medical insurance plan
program of voluntary medical care for aged and disabled disigned to cover costs of doctors' services and other items and services not covered under the basic program; also know as supplementary or voluntary Medicare or Part B Medicare.
Contribution report
quarterly tax return filed with the state by the employer that provides a summary of the wages paid during the period and shows the computation of the tax or contribution.
Prehire inquires
questions asked in the employment interview and on application forms, resumes of experience of education required of an applicant, and any kind of written testing.
Investigative consumer report
study done by a consumer reporting agency on a job applicant or current employee concerning the individual's character, general reputation, and mode of living.
Individual-account plan
supplemental unemployment benefits plan in which the employers' contributions are paid into a separate trust for each employee.
Pooled-fund plan
supplemental unemployment benfits plan financed by employers' contributions into a general fund; also known as the auto or Ford-type plan.
Electronic funds transfer system (EFTS )
system whereby the employer transfers employees' net pays to employees' bank accounts with electronic equipment rather than issuing paychecks.
Disposable earnings
the earnings remaining after withholding for federal and state income taxes, FICA taxes, state unemployment and disability taxes, and deductions required for state employees' retirement systems.
Shortfall
the excess of the amount of employment taxes required to be deposited over the amount deposited on or before the last date prescribed for the deposit.
Separation report
the excess of the amount of employment taxes required to be deposited over the amount deposited on the before the last date prescribed for the deposit.
Educational assistance
the expenses that an employer pays for an employee's education, such as tuition, fee, and payments for books, supplies, and equipment.
Taxable wage base
the maximum amount of wages during a calendar year that is subject to a particular tax, such as FICA.
Self-employment income
the net earnings derived by individuals from a business or profession carried on as a sole proprietorship or as a partnership.
