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Payroll Glossary: 25 Terms Every Business Owner Should Know

Feel lost in payroll jargon? You’re not alone. Bookmark this glossary of 25 essential terms to build your confidence and understanding.

Table of Contents

  • Essential Payroll Terms: A-Z

Essential Payroll Terms

  1. 941 Form: The quarterly federal tax return filed by employers.
  2. 1099-NEC: The form used to report payments to independent contractors.
  3. Direct Deposit: The electronic transfer of net pay into an employee’s bank account.
  4. Employee Self-Service (ESS): A portal allowing employees to access their pay stubs and personal data.
  5. Exempt Employee: An employee not entitled to overtime pay under the FLSA.
  6. FICA: The Federal Insurance Contributions Act tax for Social Security and Medicare.
  7. FUTA: Federal Unemployment Tax Act tax, paid by the employer.
  8. Garnishments: A court-ordered withholding from an employee’s wages to pay a debt.
  9. Gross Pay: Total earnings before any deductions are taken.
  10. Net Pay: “Take-home pay”—the amount an employee receives after deductions.
  11. Non-Exempt Employee: An employee entitled to minimum wage and overtime.
  12. Pay Frequency: How often employees are paid (e.g., weekly, bi-weekly, semi-monthly).
  13. Payroll Provider: A company that manages payroll processing for other businesses.
  14. PTO: Paid Time Off.
  15. Regular Rate of Pay: The rate used to calculate overtime, including most bonuses.
  16. SUTA: State Unemployment Tax Act tax.
  17. Tax Withholding: The portion of an employee’s pay withheld for income taxes.
  18. W-2 Form: The annual wage and tax statement provided to employees.
  19. W-3 Form: The transmittal form sent to the SSA with W-2 copies.
  20. W-4 Form: The form employees complete to determine federal income tax withholding.
  21. Workweek: A fixed, recurring 168-hour period for tracking overtime.
  22. Overtime: 1.5 times the regular rate of pay for hours worked over 40 in a workweek.
  23. Pay Stub: The document detailing an employee’s earnings and deductions for a pay period.
  24. Deposit Schedule: The IRS-mandated timeline for submitting payroll taxes (monthly or semi-weekly).
  25. Multi-State Payroll: Processing payroll for employees working in different states.

Speak Plain English

Still have questions? The team at Payroll On The Money is always here to speak in plain English, not confusing jargon.