Payroll checks are issued by companies to pay employees for completed work, with deductions taken for taxes and benefits. They can take various forms and must be issued within a specific time period. Employers must provide payment advice and submit deductions to the appropriate agencies on time.
Companies issue wage checks as the actual payment or net wages an employee received from their employer after completion of a period of paid work. A payroll check is a financial instrument that allows funds written on the check to be debited from employers’ bank accounts and credited to employees.
Payroll checks can take various forms; physical check, electronic funds transfer, electronic payroll account or cash. US labor law prohibits paying employees who use property or other materials.
The amount of the staff allowance is also known as the net payment. This amount is equal to the total salary or gross wages, based on the number of hours worked times the hourly rate for the period or annual wages divided by the number of wage periods in the year. From gross payroll, deductions are taken on behalf of the federal and state government for statutory benefits, such as income tax, FICA, SS, health tax, and unemployment insurance. Any additional benefits that have deductions are taken from each period’s gross pay. The remaining amount is the net salary or staff allowance.
The labor law stipulates that employees can only be paid based on a certain salary period. The options are daily, weekly, biweekly, fortnightly or monthly. Payroll checks must be issued to employees for work completed during the pay period within a specific time period after the end of the pay period.
Payroll checks must be signed by a duly authorized officer of the company. In the event of a business bankruptcy, payroll checks are protected and must be paid before claims from other creditors are reviewed.
Payroll checks become obsolete 6 months after the check date. If the check is not presented to a financial institution for cashing during this period, the check is no longer valid. A replacement check must be requested and issued for the face value of the original check.
Employers who issue paychecks have a responsibility to provide payment advice with every paycheck. The payment advisor must demonstrate the gross payment, all deductions and benefit name for the funds, net pay and payroll period. Consulting must be included in all payslips even if the amount is the same for multiple periods.
The total amount of government deductions must be summarized at the end of each calendar year and a tax return issued to all employees by the end of February of the following calendar year. The exact form used to report wage information varies by income type, state, and seven other factors.
All amounts deducted from payroll checks must be submitted to the appropriate agency within a specific time frame. Each remittance must include the employee deduction amount, employee name, payroll period, and employer names. State and federal deductions have specific remittance deadlines, and penalties are charged when employers are late with their filing. Any employer that deducts funds from employee payroll checks and does not remit them is subject to criminal prosecution.
Protect your devices with Threat Protection by NordVPN
