Payroll and Tax Terminology

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Accumulated earnings

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The total gross earnings year to date for an employee.

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Commission

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A method of paying an employee based on the amount of sales the employee generates. Commissions are normally calculated as a percent of an employee’s sales.

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Direct deposit

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The payment of an employee’s net pay using electronic funds transfer.

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Employee earnings record

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A business form used to record details of an employee’s earnings and deductions.

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Medicare tax

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A federal tax paid for hospital insurance.

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Net pay

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Earnings paid to an employee after payroll taxes and other deductions.

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Pay period

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The number of days or weeks of work covered by an employee’s paycheck.

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Payroll

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The total amount earned by all employees for a pay period.

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Payroll deduction

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Any amount withheld from an employee’s gross earnings.

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Payroll register

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An accounting form that summarizes the earnings, deductions, and net pay of all employees for one pay period.