What Are Payroll Receipts?

The idea of payrolls leads back to the ancient Greek system, where Athenians resemble today’s payroll systems. Indeed, Athenian treasurers, public servants, and more kept their financial records through chiseling stones. And today, payroll refers to a list of every worker in a company along with the corresponding amount of money they will be paid. Also, it can be another term for the salary or wage total amount of any business. Meanwhile, receipts acknowledge transactions. Combine both terms, and you form the payroll receipt. Thus, this receipt contains itemized payroll details of the employee names, income amount, timesheet, and more.

Based on a survey, Apple was recognized as the biggest company around the globe, with over $961.3 billion in market value. To boot, it was the most profitable company in 2018.

Meanwhile, Statista confirmed that Walmart had around 2.2 million workers in 2018’s fiscal year.

On the other hand, eMarketer.com stated that 68% of people prefer getting printed receipts. 19% are okay with digital receipts, while 8% are alright without any receipt.

Why Is a Payroll Receipt Essential?

If payrolls were practiced way back, then general receipts are just the same. One of the oldest receipts made was even created out of a 1×1 and one half inch thick clay, which was received by Alulu. Now, digital versions are already practiced aside from printable receipts. And since payroll receipts are still relevant, there is no questioning that these are important. To be more specific, such sheets benefit any industry in handling payment for the workers’ earnings. At least employees can see clearly how much was deducted from their payslip and what the specific amount is instead of guessing it.

A pay stub or receipt helps solve conflicts too. Maybe one worker complains why his or her salary had a big deduction. Therefore, showing the document makes it simple to explain the payroll deduction. Its explanation may refer to tax contribution or perhaps, tardiness and absences. Aside from numbers, there are labels indicated in the form anyway, so people understand what it means. With that said, liabilities are fixed. Creating numerous arguments without evidence will only make matters worse. Hence, payroll receipts exist for clarification purposes.

Payroll Processing in Easy Steps: A Review

A wise choice on who works best to manage the payroll system is an accountant. Keep in mind that a bunch of financial responsibilities come to play. Taxes and other factors to comply are part of the workload too. And before you make a payroll receipt, how sure are you that your business’ pay system is on the right track? Malpractices in the payment processing already lead to wrong accounts in the receipts afterward. Perhaps, a review in the payroll processing can help in minimizing errors. Without further ado, here are easy steps to process payrolls:

Confirm the EIN: Does the business already have an Employer Identification Number (EIN)? The EIN is a requirement for processing payrolls, including the local or state tax IDs. The government will use such requirements in evaluating a business. Therefore, government entities might check if a company met the requirements or contributed to the expected taxes. Those who still do not have the EIN should visit the official Internal Revenue Service (IRS) website to start.Comply with Employee Taxes: To ensure that your business complies with the taxes, gather the appropriate tax information first. Every employee even needs to sign tax forms as an agreement in recording the allowances or taxes. The common examples are W-4 and W-2. For the new workers, include the I-9. Be sure to contact the authorities in your state to confirm this since laws may vary.Pick a Payroll Schedule: Next, set up the schedule. And in business, four schedules are common. Choose whether you prefer a weekly, biweekly, semi-monthly, or monthly payroll. But do not choose randomly, though. Decide which schedule works well for the company. After you select, mark those calendars down to note when the paydays are. Also, make the necessary adjustments from tax dates or filings and the holidays.Determine the Gross Pay: The serious part where no error is welcome goes to the calculations. And the first example to process is the gross pay. But what is it? The employee’s gross pay refers to the sum of the employee’s working hours in a period. Next, it gets multiplied to the hourly rate. The work isn’t finished there since other factors affect the rate, like overtime hours. An increase happens in working more than the required hours in a week. Recognize the Deductions: As you were informed about the tax information already, other requirements that are part of salary deduction cannot be ignored. Typical deductions include insurance and benefits. And as you review the policies in your state, it will be easy to determine the required deductions. In standard, requirements consist of federal tax, social security, state or local tax, compensation contribution, and Medicare.Calculate the Net Pay before Payment: After you calculate the gross pay and subtract deductions, determine the take-home pay, aka the net pay, next. This amount is the final payment to deposit in every employee’s account. The same goes for paying in cash or via payroll paycheck. How it goes depends on the contract or agreement signed by workers and employers. And once the net pay is determined, you can already pay all employees during payday.Keep and Update Payroll Records: One of the essential tasks for accountants and clerks in business is bookkeeping. Thus, keeping every payroll record is a must. Maybe the IRS requires invoice or documentation about such payrolls. If the business kept those accounts, then showing proof is easy. And if any worker inquires about possible mistakes in the salary slip, update the payroll’s content if it needs correction. This action explains why receipts from payroll records play a crucial role as well.

How to Make a Standard Payroll Receipt

With a lot of existing businesses around the world, imagine how many people are paid every payday. For example, Statista reported that Apple had around $961.3 billion market value in 2018. Hence, it was the largest and most profitable business globally. On another note, Statista’s research survey proved that Walmart had approximately 2.2 million employees in the same year. Thus, it had the most number of workers. And you expect many payroll receipts dealt by these businesses as well. Now the question is, how do you create an acceptable payroll receipt? Just follow these steps:

Step 1: Plan the Appropriate Format

How do you want the payroll receipt to look? If you are assigned to the payroll department, then coordinate with the manager to finalize this. Start by visualizing the format. Formatting is necessary, so the receipts to produce are uniform. If the format and appearance of that receipt look different in each production, then people may be confused about which version to trust. Also, do you plan to create payroll receipts in print or email? According to a survey, 68% of people like paper receipts. Moreover, 19% are okay with digital versions, and 8% prefer none of the above.

Step 2: Lay Out the Business Details

When people look at the sheet, can they determine that it is a payroll receipt immediately? If not, then it might be due to the lack of details. Input the company name, business logo, payroll receipt label, and contact information at the top of the form. With those, it is easy to distinguish the document’s purpose. Albeit you provide such info, it does not mean you simply list it. Observe a decent layout, so it looks appealing.

Step 3: Insert the Necessary Payroll Elements

As we reviewed the payroll processing steps earlier, you are now familiar with what to include in payrolls. And many elements must be evident in the sheet. EIN, gross pay, net pay, tax deduction—you name it. Those vital components must be present since such factors are what workers ask about often. Be careful in labeling, though, because maybe you mixed up the net pay from the gross salary. Wrong labels and miscalculations already make the receipt null.

Step 4: Organize the Content and Details

We aim to make payroll receipts as easy and understandable as possible. And it would not happen if the full information is disorganized. Be sure to arrange the details carefully. For example, you might show the total salary amount first. Have a sense of narrative instead. With that, it means you sequence what employees should learn first to last. More so, keep the info concise by using tables and charts. Back away from lengthy sentences if things can be simplified with graphic organizers.

Step 5: Incorporate Designs

Any receipt means business, but there is no rule that these documents have to look dull. The downloadable receipt templates for grabs here are even customizable. Hence, there is room for designing and tweaking. Enhancing the design also increases business reputation. Or perhaps, you like to keep the receipts small and less wordy to prevent wasting papers. Thus, it is eco-friendly. No matter how you want to keep it creative, balance it with professionalism too. Receipts are not coloring books in the first place.

Step 6: Leave Spaces for Signatures

Last but not least, include a space to sign by employees at the bottommost part of the payroll slip. Each signature line is where every employee is expected to sign. And having signatures confirm that those workers acknowledge the accuracy of such records. Although some companies no longer include this part, it is much safer to add it for confirmation purposes. Besides, employees need not sign the form if there are errors littered all over the place.

FAQs

What is the difference between a wage and a salary?

Wages and salaries both refer to income or earnings. Yet, they also differ. When it comes to earnings based on the hourly rate or daily payment for work, that is a wage. On another note, a salary is a fixed payment that is already dealt with under an employer and employee agreement. Instead of getting paid per hour or via daily performance in wages, salaries have the same amount, may that be a weekly or perhaps, a monthly income.

What is a payroll invoice?

The payroll invoice works like a business report in which the payroll bill or invoice is shared with a third party. Such reports include the account payment activities in the invoice. And sometimes, it can be mistaken as a payroll receipt.

How long does it take to get paid after a payroll?

When the payment happens merely depends on the agreed payday of a business. In most cases, you could wait for three to four weeks after working.

Understanding the full information from payroll receipts is beneficial for every employee and manager. When you familiarize how payrolls are processed, how calculations are managed, and how to decipher the results, you cannot be deceived easily anymore. Maybe you receive a less amount of money on your next payday, and you know for sure that you deserve more. Instead of arguing and blaming anyone from the mistake, simply refer and check the accuracy of a payroll receipt.