Understanding some of the most common terms you will find on a payslip template is important. Knowing this will allow you to fill out your template quickly and accurately. While there are lots of different possibilities of things you could use to fill in your template, and going through them all could take up a whole book, I’ll focus on just some of the basics to get you going.
As the name implies, this category is just for some of the very basic information that will be needed for proper payslip documentations.
First, make sure to fill out the company name, company address, and company phone number.
Then, if you are at a company that has multiple departments, you will want to specify which department the employee for this payslip is working within. If you already have well-defined departments, like “Accounting, HR, Sales, Markieting, Finance” and the like, just use one of those. If you’re company does not have multiple departments, you can just put “General” or “N/A”
In the title section, should use the official title of the employee who this payslip is being made on behalf of.
The location section really only matters if your company has multiple branches and you want to make it clear which location this employee works within.
This is a very important section of the payslip template, and likely the one that you will need to update the most once you get the template filled out for the first time.
The “Begin Date” should be the date that the pay period began. So if you are paying someone for working the past two weeks, start with the date that began two weeks ago.
The “End Date” is just the end of the pay period. It is common to either use a two-week period or to set end dates on the 15th and the 30th of the month.
The “Pay Date” is the date that the check or other payment method is actually issued to the employee. It could be the same as the “End Date” or a day or two ahead or behind.
Typically, the two pieces of information that you will want to have filled out on the employee are the Employee Name and the Employee ID.
Be sure to use the full name of the employee when specifying the employee name.
Depending on how large your company is, you may or may not have employee IDs. Even if you are a small company, or it is just you, it is a good idea to set up an employee id. As your company grows, this will make it easier to reference difference employees. If you don’t know where to start, you can always just start with employee id number 001, and go from there.
This section doesn’t actually show what taxes are being paid. Instead, it just shows some very general information about what you have on record regarding the employee’s relationship with tax filings.
First, you will want to fill out the Status section. The first question to ask to fill this out is “is the employee married or not married?” If the individual is married, then he or she has the following options: 1) “Married Filing Jointly.” 2) “Married Filing Separately.” (Note: There are different pros and cons for each of these, which are beyond the scope of this article, but a quick google search should help.) If the individual is not married, the options are: 1) “Single”, 2) “Head of Household”, and 3) “Widow(er)”.
Depending on the individuals current tax situation, she may want to claim certain exemptions or withheld additional amounts from going to taxes. For instance, if she is planning to donate a large portion of her salary to a charitable organization (which is tax deductible), then she may want to claim exemptions in advance so that she doesn’t get stuck paying the taxes now. Otherwise, she will be taxed at the normal rate and not get her overpaid tax money back until she gets her tax refund.
On this matter, and all tax matters, it is best to engage a knowledgeable accountant for advice!
This is where you document what earnings were made by the employee in the given period. You can also keep a running tab for the entire year to date (or YTD) if you’d like.
Earnings can take many forms, but the most common are the following:
- Regular Salary – This is simply the regular salary that was earned through hours worked during the pay period
- Bonus – While every pay period will not include a BONUS, it will be important to mark this separately in periods where a bonus does occur.
- Awards – If your company hands out awards throughout the year that recognize some extra effort or other outstanding achievement, and that recognition comes with some monetary benefit, you will need to record that.
There are certainly other kinds of earnings that may apply to your particle business, so it is important to customize or add additional categories to the ones already provided in the template.
Of the earnings that an employee has made during a given period, of course not all of it will be taxable. Some things that earnings will go to, like employee 401K plans, or Health Insurance, are not taxed. These things are called deductions.
To fully understand what counts as a deduction or not, you will need to talk to a qualified accountant, or do a little more internet research. Just remember, though, that when you are calculating what taxes should be, you should be sure to subtract the deductions from the earnings first.
This is the most complicated and difficult section of the payslip template. What makes it so complicated is that 1) regulations and taxes are always being changed and 2) taxes vary a lot by state and even city.
For instance, the state of Florida does not have an income tax. But in Philadelphia, not only do you have to pay a state income tax to Pennsylvania, but there is also a city wage tax.
There are a number of online calculators that claim to be able to factor in all these various factors. The best that I have found is this one. But to be truly certain that you are getting this right, again, you will need to get some expert advice from an accountant or work directly with a payroll company that specialized in this sort of thing
Net Pay Distribution
This section just makes it clear what amount an employee will be receiving from the company during that pay period. Mathematically speaking, Net Pay = Total earnings – Total Deductions – Total Taxes.
This makes a lot of sense if you think about it. You start with the total amount that an employee earned. Then you subtract all of the things that are immediately coming out of those earnings, like the employee’s contributions to 401k plan and health insurance, and then you subtract what the employee is paying in taxes.
If your company is using direct deposit, it is common practice to specify which account it was deposited it. Usually you will want to only include the last 5 digits of the bank account number, with X’s before it. For instance: XXXXXXXXXX – 58469. This should be enough to help identify which account it is going into, and create a paper trail of any errors, should the employee change their bank-account, for instance.
Paid Time Off
While this section is not absolutely essential, and could be left blank, if you want to keep strict track of how much time off employees are taking, and how much they have remaining, it is good practice to keep this within the payslip template. This creates a strong record, and gives employees the opportunity to see and address any mistakes or discrepancies.
So that’s it for a very broad overview of Payslip Template Terms. Hopefully, this will be enough to get you going in the right direction.