What Is Payroll?
Posted on Mon, Jan 10, 2011
Payroll is, quite simply, what you pay your employees for their work. The American Heritage Dictionary says:
Payroll (n):
1. A list of employees receiving wages or salaries, with the amounts due to each.
2. The total sum of money to be paid out to employees at a given time.
Well, that sounds simple enough. But these days, payroll is a lot more complicated than just paying your employees for a good day’s work.
There are federal income taxes and state income taxes (but not in every state), local taxes, and even school district taxes in a few places. Don’t forget Social Security, Medicare, federal unemployment (FUTA), and state unemployment (SUTA), which you must calculate for most paychecks. And you’ll need to pay your liabilities to the proper tax agency at the right time.
Your employees may not wind up with the same check amounts, even if you’re paying them the same rate. Their paychecks may vary based on different factors, including the allowances on the W-4 they submitted to you, their share of benefit costs, the area in which they live, or company reimbursements for mileage or expenses.
There’s no getting around the fact of payroll if you're going to have employees. Now, you can certainly figure payroll the old-fashioned way (by hand), using government-supplied tax tables and writing it all down in a big ledger. That’s all fine. But using an online payroll software program can help you manage your payroll better than that. Then you can get back to what's most important, like building your business.