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Chapter 13

Chapter 13. Payroll Accounting, Taxes, and Reports. 13-1: Recording a Payroll. Payroll information for each pay period is recorded in a payroll register. The payroll information for each employee is also recorded on each employee earnings record.

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Chapter 13

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  1. Chapter 13 Payroll Accounting, Taxes, and Reports

  2. 13-1: Recording a Payroll • Payroll information for each pay period is recorded in a payroll register. • The payroll information for each employee is also recorded on each employee earnings record. • The payroll register and employee earning records provide all the payroll information needed to prepare payroll and payroll tax reports.

  3. 13-1: Recording a Payroll • Payroll registers are similar to a special journal, because payroll registers use columns to total debit and credit amounts needed to journalize a payroll. • Payroll journal entries are based on the totals of the Earnings Total column, each deduction column, and the Net Pay column.

  4. 13-2: Recording Employer Payroll Taxes • Employers must pay taxes to the government that they have withheld from employee earnings. • Most employers must pay four separate payroll taxes: • Employer social security tax • Medicare tax • Federal Unemployment tax • State Unemployment tax

  5. Terms • Federal unemployment tax: A tax used for state and federal administrative expenses of the unemployment program. • State unemployment tax: A state tax used to pay benefits to unemployed workers. • Lookback period: The 12-month period that ends on June 30th of the prior year.

  6. 13-2: Recording Employer Payroll Taxes • Social security and Medicare are the only payroll taxes paid by both the employer and the employees. • The federal unemployment tax is .8% on the first$7000.00 that an employee earns. • The state unemploymenttax is 5.4% on the first $7000.00 that an employee earns.

  7. 13-3: Reporting Withholding and Payroll Taxes • Each employer who withholds income tax, social security tax, and Medicare tax from employee earnings must furnish each employee with an annual report of these withholdings. • Employers are required to furnish Form W-2 to each employee by January 31st of the next year.

  8. 13-3: Reporting Withholding and Payroll Taxes • Four copies (A-D) of Form W-2 are prepared for each employee. • Copies B and C are given to the employee, A is sent to the Social Security Administration, and D is kept for company records. • Businesses in states with state income tax must prepare additional copies of Form W-2 as well.

  9. 13-3: Reporting Withholding and Payroll Taxes • Each employer is required by law to periodically report payroll taxes due to the government. • Each employer must file a quarterly federal tax return showing the federal income tax, social security tax, and Medicare tax due to the government.

  10. 13-4: Paying Withholding and Payroll Taxes • Employers must pay to the federal, state, and local governments all payroll taxes withheld from employee earnings as well as the employer payroll taxes. • Federal unemployment insurance is paid by the end of the month following each quarter if the liability amount is more than $100.

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