PAYROLL AND BUSINESS FORMS

Payroll and Business Forms

Table of Contents

Payroll 3

Internal Control of Payroll 4

Determining the Payroll 4

Recording the Payroll 5

Sole Proprietorships, Partnerships, and Corporation 6

Sole Proprietorship 7

Partnership8

Corporation 8

References …..… 10

Payroll and Business Forms

Payroll

Managing the cost of labor is a crucial aspect for successful and profitable operations in the hospitality industry. Since this industry is a peoples' industry, the payroll constitutes a substantial proportion of operational costs (Cote 2001). Restaurants, casinos, lodging, clubs and tourism businesses employ a large number of labors to cater the service needs of their customers. Therefore, effective and controlled payroll is the key for managing costs in such businesses. In addition, federal and state laws also require companies to keep records of payroll as well as the associated taxes (Harris 2007).

The term payroll represents the expenses incurred for settling wages and salaries of the employees (DeFranco & Lattin 2007). In a broader respect, fringe benefits like paid vacations and insurance also form part of overall employee compensation. These benefits are sometimes referred to be a part of payroll as well. Whereas wages are typically paid on hourly rates, salaries are paid on weekly or monthly basis. An effective payroll function involves a series of steps like:

1.Internal Control of Payroll

2.Determining the Payroll

3.Recording the Payroll

4.Managing the Employer Payroll Taxes

Internal Control of Payroll

With regards to management of payroll, internal control is meant to safeguard the assets of the company against any unauthorized payments. Another purpose of internal control is to monitor the reliability and accuracy of the accounting records pertaining to the payroll. A good internal control will put a check on irregularities with respect to overstatements and misrepresentations in payroll. The central activities of internal control include:

Smooth hiring of employees, and the subsequent posting of the hired employees on the company's payroll, usually through a designated authorization form

Effective monitoring of timekeeping, especially as it related to hourly wage workers.

Preparation of payroll by the human resource department. This activity involves calculations of gross and actual payrolls (Cote 2001).

Paying the payroll. After the final approval of the HR department, the payroll report is sent to treasurers' department where paychecks are prepared and credited to the employee's payroll account.

Compliance of the Fair Labor Standards Act (FLSA). This act lays down some guiding principles for both wages and overtime entitlement. As per this law, overtime payment rate must be at least one and a half times as the regular rate (DeFranco & Lattin 2007). Another important provision of the law mandates overtime payments for workers whose gross earnings are less than $23660.

Determining the Payroll

Determination of the payroll involves computing three amounts: gross earnings (wages or salaries), payroll deductions, and net pay. Gross earnings show the total compensation earned by the employee in the form of wages, salaries, commissions and bonuses. They reflect the maximum amount of earning payable to an employee (Guilding 2002). Payroll deductions show the applicable allowances that are deductible from the gross income of workers. These allowances could be mandatory like ...