Important Payroll Terms to Know

What are some important payroll terms to know?

1. Deductions: Wages withheld from an employee’s earnings for the purpose of paying taxes, benefits and other mandatory items (e.g., garnishments) or voluntary contributions (e.g., charitable donations).

2. Gross pay: Total pay before taxes and deductions.

3. Net pay: Take-home pay after taxes and deductions are subtracted from earnings.

4. Compensation: All monetary and non-monetary payments, including the value of benefits, received by an employee.

5. Pay stub: A summary document that demonstrates the factors – number of hours worked, the rates paid for those hours, deductions for taxes and benefits, etc. – that were used to calculate an employee’s pay for a designated period of time.

6. Pay period: How frequently a business runs payroll. The Fair Labor Standards Act (FLSA) requires employers to pay employees regularly. Your pay-period options are weekly, biweekly, semimonthly, or monthly.

7. Labour burden: Refers to the cost of having employees. It comprises the employer’s portion of Federal Insurance Contributions Act (FICA) taxes, unemployment taxes, and workers’ compensation.

https://www.fool.com/the-ascent/small-business/payroll/articles/payroll-terminology/

April 26, 2023 Johaine - JTM Business Solutions Knowledge Hub accounting terms, Payroll, small business tips

About the author

Johaine is a Chartered Professional Accountant (CPA) with over 15 years of accounting experience. Johaine has a strong background in bookkeeping services, internal control systems & procedures and risk advisory services. Her skills and experiences garnered over the years has served her well in her more recent roles as Controller and CFO. Johaine is also an active Board member, Executive Committee member and Finance/Audit Committee member of the Better Business Bureau.

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