The formula is as follows:
Net Payment Calculation:
Employee's gross pay = (pay rate times number of hours worked)
minus Statutory payroll tax deductions minus Voluntary payroll deductions
= NET PAY
As mentioned above employers are also required to report payroll tax obligations in accordance with federal and state law. Below is a list of following responsibilities on the part of the employer.
Federal tax deposits
Annual federal unemployment tax return (Form 940 or 940EZ)
Employer's quarterly payroll tax return (Form 941)
Annual Return of Withheld Federal Income Tax (Form 945)
Wage and Tax Statements (Form W-2)
In regards to the accounting entry, the employer must first record the gross wages earned by the employee, which was mentioned in detail above. It must also include the withholdings of their pay and any addition withholdings which also is detailed...
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