POA Payroll Accounting

POA Payroll Accounting

Payroll

• Enables the payment of salaries and wages to employees of an organization

• Payments must be: Regular and on time, Confidential, Accurate, Secure

Key terms

• Net pay/ Net earnings/ Take-home pay - the amount of pay AFTER deductions

• Gross pay/ Gross earnings - the amount of pay BEFORE deductions

• Voluntary/personal deductions - deductions the employee requests from their salary e.g. payments towards a loan, payments towards a sports club, payments towards savings, Health plan contributions, Pension Contributions, Life insurance contributions

• Statutory deductions - are mandatory or compulsory deductions the employee must make from salary e.g. NIS, Health Surcharge, Income Tax, Social Security

• Bonus - additional earnings a worker may receive for work well done or as part of company earnings

Key Terms

• Tax free allowance - a portion of income that is not taxed e.g. income $12 000, but $5 000 is that amount is not taxed. $5 000 is the tax free allowance and tax will be calculated on the remaining $7 000

• Taxable pay/ Taxable income - this is the portion of income that will be taxed e.g. using the example above the $7 000 is the taxable income

• Tax deductible/ Deductible - this is an amount that is subtracted from gross earnings before tax is calculated

Key terms

• Time sheets - forms showing employee weekly attendance. Gross pay is calculated from thsi sheet

• Time card - e,ployees use this to 'clock in' and 'clock out' from their place of work. This s used to reate the time sheets

• Salary - paid monthly regardless of hours worked or pieces produced

• Wage - paid based on factors such as hours worked and number of pieces produced. Can be paid weekly or fortnightly (every two weeks)

Key terms

• Time rates/ hourly rates - a fixed rate per hour which is multiplied by the number of hours worked to calculate pay

• Overtime - this is time worked beyond the normal working hours

• Time and a half - this means the time rate/hourly rate is multiplied by 1.5 and then multiplied by the number of hours worked to calculate pay

• Double time - this means the time rate/hourly rate is ultiplied by 2 and then multiplied by the number of hours worked to calculate pau

Key terms

• Piece rate - pay is calculated based on the number of pieces produced

• Commission - pay is calculated as a percentage of sales