Deduction - An amount taken out of an employee's paycheck for things like taxes, benefits (e.g., health insurance), or retirement contributions. Pre-tax deductions lower taxable income (e.g., 401(k), HSA) Post-tax deductions are taken after taxes are calculated (e.g., Roth 401(k), garnishments)
Direct Deposit - A payment method where an employee's net pay is automatically deposited into their bank account, rather than receiving a paper check.
Earning - Any type of compensation or income that an employee receives from their employer during a pay period. This includes regular wages or salary, but also encompasses additional forms of compensation such as overtime pay, bonuses, PTO, commissions, etc.
Exempt Employee - An employee who is not entitled to overtime pay under the Fair Labor Standards Act (FLSA). These employees are usually salaried and meet certain job duty requirements (often administrative, executive, or professional roles).
FICA - Short for the Federal Insurance Contributions Act. It includes: Social Security tax Medicare tax - These taxes are withheld from employees' paychecks and matched by the employer.
FUTA - A federal tax that employers pay to help fund unemployment benefits. Only employers pay this tax (not employees). It's used to support state unemployment programs. Reported annually on Form 940.
Garnishment - A court-ordered deduction taken from an employee's paycheck to pay off a debt, such as child support, unpaid taxes, or student loans. Employers are legally required to process these once notified.
General Ledger - A complete record of a company's financial transactions, organized by account. In payroll, the General Ledger entry tracks things like: Wages paid, Taxes withheld, Employer tax liabilities, and Benefit costs.
Gross Pay - The total amount an employee earns before taxes or any deductions are taken out. This includes regular wages, bonuses, and other compensation.
Masquerade - permissions to log in as if you are an employee, employer, or broker.
Net Pay - The amount an employee takes home after all taxes and deductions have been subtracted from gross pay. Also called take-home pay.
Non-Exempt Employee - An employee who is entitled to overtime pay (usually time and a half) for any hours worked over 40 in a workweek. These employees can be paid hourly or salary, but their role must meet FLSA guidelines.
One Off - Off cycle payroll runs. Examples of this would be commission runs, bonus pay, corrections, final pay (for certain states).
Overtime - Extra pay earned when a non-exempt employee works more than 40 hours in a workweek. The standard overtime rate is 1.5 times the employee's regular hourly rate.
Pay Frequency - How often employees are paid. Common pay frequencies include: Weekly (every week) Biweekly (every two weeks) Semimonthly (twice a month) Monthly (once a month)
Pay Stub - A document given to employees each payday that shows their earnings, deductions, and net pay. It breaks down things like hours worked, tax withholdings, benefits, and year-to-date totals.
Payroll Edit Screen - The screen where you enter or make changes to payroll details for a specific pay period—like hours worked, bonuses, deductions, or other earnings.
Payroll Reversal - A payroll reversal occurs when an employer tries to pull back or recover money that was already sent to an employee's bank account, usually because there was a mistake in the payroll (like overpaying someone, paying the wrong person, or entering incorrect hours).
Payroll Subgroup - A way to organize employees into separate groups within your payroll system so you can pay them differently based on their specific needs. This is useful when your company has different FEINs, various pay schedules, different levels of admin access, or other requirements that need to be handled separately from your main payroll process.
Payroll Summary Screen - The screen you see after clicking Save and Review on the Payroll Edit Screen. It summarizes payroll data, including taxes, garnishments, deductions, and employer costs. There will be an option to review the pre-process register and is essentially your last stop before you submit payroll.
SUTA/SUI - (State Unemployment Tax Act/State Unemployment Insurance) - A state-level tax that employers pay to fund unemployment benefits for workers who lose their jobs. Most states require employers only to pay this tax, but a few states require employee contributions too. The rate and wage base vary by state and by employer history (based on turnover and claims). Note: SUTA and SUI are different names for the same thing—some states refer to it as SUTA, others as SUI.
W-4 - A form you fill out when you start a new job. It tells your employer how much federal income tax to withhold from your paycheck. You can update it anytime if your personal or financial situation changes (like getting married or having a child).
W2 - A form that shows how much money you earned and how much tax was taken out of your paycheck during the year. Employers send it to both you and the IRS, and you use it to file your annual tax return.
Withholding - The portion of an employee's paycheck that an employer sends directly to the government for taxes—like federal income tax, Social Security, and Medicare.
Year-to-date - A running total of earnings or deductions from the beginning of the calendar year up to the current payroll. YTD amounts are shown on pay stubs and help employees track income and taxes over time.