There are two kinds of taxes that a business conducting accounting payroll has to be concerned with to run payroll effectively. There are withholding taxes which are also known as Pay-As-You-Go/ Earn (PAYG/ PAYE) held from an employee’s pay, or the employer pays from their own funds. The later form can be in fixed amounts, or linked by proportion to the pay a worker takes home.
The calculation of payroll deductions requires a detail-oriented approach and accurate work on the part of the payroll accountant. Payroll is reported through calculating various payroll deductions as well as gross pay in order to come up with a net pay amount. Withheld amounts from employees net pay include Federal, Medicare and Social Security.
FICA are both the company’s and worker’s share of Medicare and Social Security taxes. These are withheld by ½ and federal income tax is withheld from a workers pay as well. A company can be required to pay federal and state unemployment amounts, and withholding county, state and city income tax may also be a requirement in some areas. Worker’s and independent contractors need to be differentiated when amounts are to be withheld, as hiring companies are not required to withhold from independent contractors.
A Trust Fund Recovery Penalty is charged on employers who do not pay the U.S. Government withheld taxes and is enforced by the IRS. Individuals who willfully do not pay, account for or collect the amounts and are determined as responsible for the payout by a 4180 Interview, are assessed the Trust Fund Recovery Penalty which is 100% of what is owed in addition to interest accrued. Whether nonpayment is intentional or accidental, the Trust Fund Recovery Penalty is a substantial hit to an employer’s funds, and it is important for employers to keep records of when withheld payroll taxes are due to be paid.
Unemployment taxes are both state and federal (FUTA and SUTA). Hiring companies are allowed credits of up to 5.4% on State unemployment amounts if they have gained eligibility for the maximum credit, and usually net 0.8% of gross compensation. State rates differ for FUTA based on the base of minimum wage, and companies are only liable for the first $7,000 in an employee’s calendar year of compensation.
Be sure that a detail-oriented approach is used when calculating payroll deductions, and use additional care when scheduling the payment of amounts withheld to avoid unnecessary penalties.
Business accounting software is one of the most popular business products of today’s time. Accounting is defined as the activity of keeping detailed records of the different transactions of a business. This is very important for any business because this process helps them evaluate whether or not their business is profitable, whether or not they should make a move that could improve their business, and whether or not the business should shut down operations. All these are important questions to which the accounting process provides answers.
The accounting process is a very strenuous task and requires a lot of time and paperwork. The accounting process is usually done with a journal and ledger wherein the accountant is given receipts and notifications of the different transactions of the business. The accountant then proceeds to the analysis of each transaction and places each one in the proper account title. After, the accountant prepares the financial statements of the company. This usually takes up a lot of time and increases the amount of paperwork that an accountant must maintain. The amount of paperwork reduces the reliability of the information that the accountant provides because of the increase in the chance that there might be a mistake. That is why this type of software has become one of the most important items that a business must have.
Business accounting software reduces the amount of work that an accountant does. It has a database wherein all the transactions of the business can be organized and maintained. The database allows for accountants to keep track of the transactions and once they are able to do this, they can then proceed to the analysis of those transactions.
In the past, when an accountant analyzes transactions, they had to make use of ledgers, journals and receipts. Now, with the use of the software, all they have to do is input the different amounts into the proper account titles and the system does the rest. It is able to compute the businesses revenue, expenses, assets and liabilities. These four are used by accountants to create the different financial statements of a company such as the balance sheet, income statement and statement of shareholders equity. The software also allows for the accountant to easily determine the accounts that need to be placed in each financial statement.
There are many companies that provide businesses with this type of software. Most of these companies are IT companies and that have developed versatile versions of the software. Majority of the software that is out there in the market not only provides businesses with the ability to maintain transactions, but also allows for them to make decisions based on the data that is generated by those transactions.
Business accounting software has proven to be one of the most important business items in today’s time. Businesses are developing more hi-tech ways to do business and this overwhelms their accountants at times because they have to come up with different ways to maintain the accounts of those types of transactions. The software makes both the business and the accountants lives a lot easier. They are able to provide the business with a more organized manner.