Payroll and Business Tax Accounting
Chapter 1 – The Need for Payroll and Personnel Records
Fair Labor Standards Act (FLSA) or Federal Wage and Hour Law – A federal statute of the United States that was established in 1932 by Senator Hugo Black. This statute “contains provisions and standards concerning minimum wage.” It also covers equal opportunity requirements so that everyone is paid a fair wage regardless of race or sex. It covers overtime and holiday pay, record keeping, and child labor. (Textbook) These standards affect “employees in the private sector and in federal, state, and local governments. Covered nonexempt workers are entitled to a minimum wage.” (www.dol.gov/whd/flsa) ...view middle of the document...
2% for Social Security plus 1.45% for Medicare), and the tax is automatically withheld. Your employer contributes the rest.” (CNN Money)
Income Tax Withholding Laws – Withholding taxes cannot be withheld unless these three requirements have been met. “There must be, or have been, an employer-employee relationship. The payments received by the employee must be defined as wages under the law. The employment must not be exempted by the law.” (Textbook) There are three types of withholding. They are “Wage withholding taxes, Withholding tax on payments to foreign persons, and Backup withholding on dividends and interest.” The amount paid to be withheld is “based on the amount of payment subject to tax. Withholding of tax on wages includes income tax, social security and Medicare, and a few taxes in some states.” The amount withheld is determined by the number declared on the W-4. This amount is reported annually. (Wikipedia)
Federal Unemployment Tax Act (FUTA) – This is the tax act that provides workers compensation to people who have lost their jobs. (IRS.gov) This federal law “imposes a federal employer tax used to help fund state workforce agencies.” This is reported by filing Form 940 either annually or quarterly. “FUTA covers a federal share of the costs of administering the unemployment insurance (UI) and job service programs in every state. In addition, FUTA pays one-half of the cost of extended unemployment benefits (during periods of high unemployment) and provides for a fund from which states may borrow, if necessary, to pay benefits.” (Wikipedia) This tax is only enforced until the employee reaches $7,000 for gross earnings for the year.
State Unemployment Tax Act (SUTA) – “The State Unemployment Tax Act (SUTA) describes state unemployment taxes imposed on employers. The majority of employers are responsible for paying federal and state unemployment taxes. Employers are responsible for paying an employee's FUTA taxes under the Federal Unemployment Tax Act. Each state determines its SUTA tax rate. In most states, employers are responsible for paying state unemployment insurance taxes to fund their state unemployment insurance system.” (smallbusinesses.chron.com/suta-tax-pays-it-17725.html) Employers are only charged this rate until the employee reaches $9,000 for the year in gross earnings. The SUTA rate for 2014, has a minimum of 0.54%, a maximum of 7.35%, and a new employer rate of 2.7%. (taxpolicycenter.org)
Civil Rights Act of 1964 – This is the equal opportunity law that ensures that all employees are treated fairly. This law “forbids employers to discriminate in hiring, firing, promoting, compensating, or in any other condition of employment on the basis of race, color, religion, gender, or national origin.” (Textbook) This law also includes unrealistic height and weight requirements, as well as, discrimination against individuals who are lesbian, gay, transgender, bisexual or transsexual. It also...