Important Payroll Terms to Know

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.