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Departmental Payroll System: Terms & Practices

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  • 0:00 What Is Payroll?
  • 0:37 Time Sheets
  • 2:17 Deductions
  • 2:53 Paying Workers
  • 3:20 Lesson Summary
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Lesson Transcript
Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

After reading this lesson, you will understand how you end up with a paycheck from your company's payroll department every pay period. Learn how they know how much to deduct and how much to pay you.

What Is Payroll?

Meet Sam. Sam does the payroll for a coffee shop. Sam is going to show us what he does to make sure all of the coffee shop's employees get paid the right amount each pay period.

Payroll is the list of employees that a company has along with instructions on how to pay each one. Some employees receive a set amount of pay for each pay period, while other employees earn a different amount each pay period depending on the number of hours worked or commissions earned. In this lesson, we'll look inside the payroll of the coffee shop to see how it operates.

Time Sheets

Sam collects a pile of papers from a bin. These are time sheets. A time sheet is a log of how much an employee has worked during a pay period. Each employee is responsible for filling in his or her own time sheet. Most employees at the coffee shop are paid hourly, thus keeping an accurate record of the number of hours worked is important for these employees or they might not get appropriately paid for their time.

For example, if Jake, one of the coffee shop's baristas, forgets to write down that he worked 4 hours on a Tuesday, he won't get paid for those hours. On the time sheet, each employee writes down the dates of the pay period and the dates and times worked. Some time sheets require the employee to write down start and end times, including time outs for breaks and meals. Businesses might also use time cards that employees have to stamp with a time stamping machine or computer programs that require employees to enter a code and click 'punch in' and 'punch out' buttons, or the like.

Some companies don't use time sheets at all because their employees are full-time and are expected to be in the office for at least 8 hours a day. With these companies, payroll simply pays each employee at his or her rate for the full-time work he or she did for that pay period.

Sam begins to prepare a paycheck for Jake, who worked 50 hours in the past pay period. Jake's pay rate is $11.50 per hour. At this rate, Jake receives gross pay of $575 ($11.50 * 50 = $575). Gross pay is the amount before deductions are taken, but this isn't the amount that will be printed on Jake's paycheck.

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