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All nonexempt employees should receive overtime pay. This Payroll taxes
includes both nonexempt hourly and salary workers. You will deduct payroll taxes from the wages of every
Overtime hours typically begin after an employee works 40 employee. The amount you withhold from each employee will
hours in a week. Overtime pay is one-and-a-half times the vary depending on total earnings and how many withholding
normal rate of pay. allowances the employee claims.
Check your state overtime requirements, and learn how to Payroll taxes include federal income tax, state income tax,
calculate overtime where your business resides. Some states local income tax, federal unemployment tax, state
have different overtime requirements, such as double-time unemployment tax, Medicare tax, and Social Security tax.
pay. Garnishments
Fringe benefits
A garnishment is a court-ordered deduction post-tax
Fringe benefits are a type of compensation. Benefits can deduction. A garnishment is used to pay off an employee’s
include education assistance, health insurance, retirement overdue debt. You could be instructed to deduct money from
plans, and employee discounts. Any benefits you offer an employee’s paycheck to pay for unpaid taxes, defaulted
should be included in payroll. Some benefits are taxable. loans, and overdue child support. If you need to deduct a
Other pay
garnishment, you will receive a notice from a court.
Your employees could have additional sources of pay. Net and gross pay
Service workers may receive tips. Employees must report all
tips to you, and there are payroll taxes on tips. You may also You will show an employee’s net and gross pay on a pay
choose to pay your employees a commission or a bonus pay. stub. Gross pay is an employee’s total pay. IRS forms
You should include commissions and bonuses when you run typically ask for an employee’s gross pay.
payroll. Net pay is an employee’s pay after all deductions are
Deductions subtracted. Net pay is an employee’s take home pay. Banks
and other loan providers typically want to know
A deduction is any money you subtract from an employee’s someone’s net pay.
total wages.
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