The total of hours that an employee is working will be multiplied to the rate of payment in order to get the gross earned amount for the employee, and that is how you start the basic guide of payroll accounting. This kind of calculation is usually done every week, every two weeks, or once a month. There are some other procedures needed by the employer before the employee will get the actual check.
Some other factors like the withholdings and taxes will be retained from the paycheck before it will be given to the employees. The money should first be taken from the gross earnings of the employee before he or she will get his or her take home pay or net income. There will always be a periodic change in the IRS or the Integral Revenue Services when it comes to the formulas, income brackets, and percentages. An example for this is during the 1970s, 70 percent of the gross income was the highest federal income bracket.
The paycheck of an employee will be deducted with the fees from the Federal and State taxes, Medicare, and Social Security. The current tax rate in Medicare is set at 1.45 percent while the tax rate in Social Security is set at 6.2 percent of the gross earnings. Depending on where the employee is in the income bracket, the federal income tax today is ranging from 10 to 35 percent. There are 7 states that do not impose income tax, but the state taxes in the rest of the states will be different. You can search the internet in order to know more about payroll accounting services Pelham in each states.
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 will be paying a portion of the Medicare, a portion of the state unemployment tax and federal unemployment tax, as well as a portion in social security tax.
There are also some documents that will need to be retained by the employer. The original employment application, a copy of the W-2 form of the employee, the federal and state W-4s, and the time sheets are the documents that need to be retained by the employer.
You can find in circular E almost all of the things that you need to know when calculating the payroll taxes and withholdings. There are a lot of websites in the internet that you can look into if you want to know more information about the current issues. This article will serve as a guide on the answers and process when it comes to any questions you might have about payroll accounting. There are so many things that you need to take note and be more aware of in order for you to really understand all the things that is revolving around the process of Pelham payroll accounting.