'Research Paper Taxation Essay\r'

' lock is the fixed hail of fee for service rendered showing a fixed period of judgment of conviction, norm anyy hours, or fixed measure of track down. It is usually a compensation tending(p) to skilled and fumbling labor. billing is usually a wage given to skilled and unskilled labor. Commission is usually a wage given to a gross revenueperson based on the tot up of his sales. This amount is usually added to basic pay.\r\nBonus is given to simulate employees to work more efficiently and effectively (Valencia & Roxas, 2009) To make sure that employees comply with BIR edict and local g everywherenment laws, companies must hold signifi deposet employee and beau monde in pretendation in their brookroll department department schemes. prospect up and running the different components that comprise a paysheet department department schema requires due diligence and up to(predicate) knowledge of valuate legislation. Employee’s benefits In Philippine Accounting Standards (PAS) 19, paragraph 7 states that employees benefits argon all forms of consideration given by an entity in deputize of operate rendered by employees.\r\nThese benefits may be paying directly to the employee’s or to their dependents, such as their children or spouses. These faecal matter be settled by payment in cash in form goods and services. Paragraph 4 of PSAS 19 enumerates the following quadruplet classes: (a) short term employee benefits; (b) post-employment benefits; (c) otherwise term employee benefits; and, (d) termination. Employee selective randomness During the new hire process, companies must make reading such as medical insurance and W-2 forms to forge what should be deducted from an employee’s paycheck.\r\nThese forms besides provide employers which of import information, such as the employee’s hearty security measure event and their withholding amount for presidency value purposes. The arrangements must al so track and process changes make to the employee’s valuate revenue exemption status, pensions, insurance ends or retirement funds. Salary information As incite of the new hire process, payroll department systems include a component that designates which employees ar full clipping, part magazine and contractors. Classifying worker in a payroll system is of import since the government levies high penalties on companies that categorize employees incorrectly.\r\nApplicable taxes and deductions The National internal Revenue command (R. A 8424) requires the employer to withhold portion of the salaries earned by employees that leave at least approximate an income tax due of the earner relative to the income earned. The monthly or semi-monthly withholding s taxable could be obtained from the BIR to servicing as guide as to what amount to be withheld from the salary of the employee (http://www. ehow. com/list_6725482_components-payroll-system. html, 17 July 2010). In prep aring a payroll, authentic government man aged contri just nowions essential to be deducted from the gross mutant of severally employee.\r\nThese include withholding taxes, PAG-IBIG, SSS (Social security measures System) and PhilHealth contributions. Withholding taxes is remitted to BIR while PAG-IBIG is remitted to Home Development and rough-cut Fund (HDMF) (Cabrera, Ledesma & Lupisan, 2009). some other payroll withholdings include employee contributions to benefits, retirement identifys, and charities, these be determined by the employee during the bam benefits selection process offered by their employer and must be taken into account as well as any employer matches when reporting payroll .\r\nMethods of payroll reckoning A payroll system involves everything that has to do with the payment of employees and the filing of employment taxes. This includes safekeeping track of hours, cipher wages, withholding taxes and other deductions, thus appropriate orders must be applied in the computation to carry out a desirable output. More and more aspects of payroll be being handled electronically.\r\nMethods include direct paycheck deposit, debit cards, payroll and non-payroll, use Web-based information system to allow employees access, with a secure password, to their individual payroll records including pay stubs, an earnings record and in any(prenominal) cases, employer information, such as the smart set manual or health insurance plan overview (Banning, 2008) Giove (1993) stated the vii regularitys for computing payroll: Hourly Rate intention Employees paid on an hourly rate plan receive a fixed amount for each hour they work.\r\nAn employee’s regular earnings argon equal to the employee’s hourly rate figure by the number of hours worked during the payroll period. Salary devise Salaried employees receive a fixed amount for each payroll period, whether weekly, biweekly, semimonthly, or monthly. If an employee on the salary pl an works less than the regular hours during a payroll period, the employer may deduct for the sentence lost, although in most cases the employer does not make such a deduction. Regular earnings would be determined by multiplying that hourly rate by the actual number of hours the employee worked during the payroll period.\r\nOvertime Pay All employees in all establishments and undertakings whether for profit or not are entitled to overtime pay for work rendered beyond eight (8) hours. But this does not apply to managerial employees, field personnel, and members of the family of the employer who are dependent on him for support, national helpers, person in the personal service of another, and workers who are paid by issuings. Employees in the government are also entitled to overtime pay but they are governed by Civil Service laws and rules. alone employees in the private sector are cover by the Labor Code.\r\nGuaranteed Wage It is a pen agreement to pay an employee a guaranteed m inimum amount regardless of the hours worked, with an duplicate half-hour premium for hours over 40. Piece †Rate Plan It is a compensation plan whereby employee earnings depend on the units produced. Commission Plan Sales commission plans vary greatly from telephoner to order but are more often than not based on the sales made during payroll period. Combination Plan This is a compensation method whereby employees receive a fixed amount of salary for each payroll period convinced(p) an extra amount for production (piece-work) or sales (commission).\r\nTimekeeping Records dead on target timekeeping is an essential part of an efficient payroll system. every business must eat an orderly method of recording the hours employees worked during the payroll period. The time records show the date and the time the workweek starts, the number of hours worked each day, and the agree hours worked during the week. Time records are filed after the payroll is disposed(p) and, in accordan ce with the requirements of the law, retained up to threesome years. The most common methods of timekeeping use a time clock with timecards or a time sheet.\r\n in that location are twain primary reasons to maintain sinless payroll records. First, is the collection of the data necessary to exercise the compensation for each employee for each payroll period. Second, formulation of information needed to complete the various government report-federal and state- postulate of all employees. All business enterprise both large and small are required by law to withhold certain amounts from employees’ pay for taxes, to make payment to government agencies by ad hoc deadlines, and submit reports on official forms. (McQuaig & Bille, 2008). Other Aspects of payroll department Accounting System\r\nPayroll study The payroll register summarizes employee earnings and deduction information in a journal entry that is inserted into the superior general ledger for accounting and g eneral research purposes. Payroll registers are also used to create tax report. These documents are prepared by payroll faculty or generated using payroll aimr system. Payroll Services The meteoric success of payroll services is not accidental, but rather a reflectiveness of the business community’s willingness to outsource the deadening and complex task of payroll accounting to external specialists.\r\nThe upside of outsourcing payroll is that payroll services understand that the company complies with laws pertaining to payroll. That is a big deal considering the time investment it would take the payroll officer to squelch current on payroll- colligate legislation. Another big plus is that payroll services are responsible for keeping track of each employee’s accumulated earning, tax withholding, and other information needed to issue W-2 forms at the end of the year.\r\nThey also stay on exonerate of things like direct deposits, salary adjustment, quarterly tax payments and all of the other expound that can be distraction from the important conjecture of leading the company (http://Gaebler. com/payroll-services, 8 Aug, 2010). In-house Payroll If contracting a payroll service does not sound like a good fit for a business, the management also has the option of doing it in-house. But if the management plans on delivery money by personally administering the payroll, having more alternatives will be a better idea. Even if the company only has a few employees, dealing with payroll-related details can be a waste of time.\r\nInstead, designating the job to an employee who can give it the time it requires so remarkable time can be dedicated to other things (http://Gaebler. com/in-house-payroll, 8 Aug, 2010). Whoever ends up doing payroll in the company will be happy to know that thither is a lot of packet out there to help them. In fact, most accounting software solutions have payroll modules. Start by assessing the qualification of their cu rrent accounting software weapons platform. If it does not have a built-in payroll function, chances are it is forthcoming from the manufacturer as an add-on.\r\nIf it is not, then the company needed to decide whether to change accounting to one that does or attempt to name a payroll program that is compatible with the current system. Either way, it is worth the time to find a computerized system that meets the company’s needs rather than trying to do it the quaint way. Internal Control A rule’s accounting and payroll functions are critical for the tutelage of a solid financial foundation. Accurate and timely financial reports are crucial to administration and wag decision-making.\r\nPayroll must be accurate, as it represents the territorial dominion’s largest budgeted expenditure. Internal controls must safeguard the district’s assets from misappropriation. Payroll processing is an error accustomed activity. If organizations have just one or two employees it may seem relatively easy to compute salaries outstanding, taxes etc, but as small business starts adding employees they find spending more and more time in computation of salaries including variable pay. Errors are common in the full and final settlement and additions when employees join in the middle of a term as the processes are manual (http://ezinearticles. om/? expert=Mikael Anderson, 4 Aug, 2010).\r\nWaterhouse (2010) said in one of his studies that the objective of internal controls for payroll is to interpret that payroll disbursements are properly recorded and that related legal requirements (such as payroll tax deposits) are complied with. Segregation of duties is an effective internal control. The bank atonement clerk reconciles the bank accounts and is not involved in processing or approving items for payment. A payroll administrator, supervisor, specialist and six clerks perform the payroll function.\r\nThe world Resources Department (HRD) enters emplo yee data into a database share by Personnel and Payroll and sets the rate of pay. The software system controls the ability of individuals to change information based on their access to the system. This prevents unauthorized individuals from changing this information (http://window. state. tx. us, 6 Aug, 2010). Gelinas, Sutton and Hunton (2005) included in their study some of the procedures that can be used to prevent or incur schemes. First is the direct deposit of payroll to elapse alteration, forgery and theft of paper check.\r\nSecond, is checking for duplicate names, addresses, and Social Security number in the employee data, finally is equivalence actual to budgeted payroll. Expense Accounts are often an battleground of fraud and abuse. This include: (a) using legitimate support from personal expense for the business expenses; (b) overstating expenses by fixation receipts; (c) submitting fictitious expenses by submitting copies of invoices. Such abuses can be minimized by formulating reasonable policies that comprise employees for their out-of-pocket expenses.\r\nCopies of invoices should only be accepted in extreme circumstances. Finally, expense account activities should be monitored on a regular basis to detect unknown patterns (Gelinas, Sutton & Hunton, 2005). Payroll Fraud Connection Payroll, connatural to cash disbursements, is an area ripe with fraud potential. afterward all, large organizations will make thousands of payments to employees for payroll and expenses account reimbursement every payroll period. Firth (2006) expresses that Payroll Fraud is an important issue that needs to be addressed by both Finance and Payroll professionals.\r\nSome of the severalize activities need to be considered include: meliorate the fiber of master file data, reviewing the end to end payroll process, and reviewing the people that are performing each flavor in the payroll function. It is worth remembering that improving each of these areas will not only avoid the risk of payroll fraud, it will also result in many other business improvements dependable across the organization. Here are some of the types of payroll frauds, along with the median loss for each to an employer: (a) shadiness Employee, employees do not actually work for the company but receives paychecks.\r\nThese can be recently bygone employees or made-up persons; (b) Falsified hours and salary, employees exaggerate the time that they work or are able to increase the salary in their employee date; (c) Commission Schemes, employees falsify the sales on which commissions are based or increase the commission rate in their employee date; and, (d) preposterous worker’s compensation claims, employees fake injuries to collect disability payments (Gelinas, Sutton & Hunton 2005).\r\n'