Year-to-date payroll processing is important to any small business because a substantial percentage of the business’s expenses go to paying the wages of their employees. Year-to-Date payroll processing is the amount of money that your business has spent on payroll beginning at the first of the calendar or fiscal year and ending on the current payroll date. It is calculated based on the employees’ gross wages which is the amount of money earned by the employee prior to taxes and deductions.
Importance of Year-To-Date Payroll Processing
Year-to-Date payroll processing is important for your small business because it will help determine an appropriate annual budget to cover the cost of such a large business expense. It will also help fill out the W2 information for each employee and ensure that the forms are accurate.
Year-to-Date Payroll is also important because there are several government mandates that a small business owner will need to comply with so it is important that you have an accurate account of employee wages, payments, and deductions.
What is Payroll Accounting?
Payroll Accounting includes several various aspects of the small business payroll processing including record keeping, W2 taxable wages, year-end payments, benefits, and paycheck distribution. Payroll Accounting can help a small business comply with all state tax laws and federal and state employment tax regulations and procedures.
The Year-to-Date summary can include all of the following components:
YTD Gross: the sum of the pay cycle’s earnings for the year
FIT Gross: subtracts the total reductions for each pay cycle throughout the year and is also found on the W2 form
Fed Inc Tax: Federal Income Tax amounts that have been deducted all year
There are also parts of the statement that include social security tax as well as Medicare gross and Medicare tax. The payroll processing statement will also include the tax status, the payment number given to each paycheck or earnings statement, and the distribution number which is an internal code that helps to identify where the earnings had been distributed to.
When you complete a Year-to-Date payroll processing statement for your small business, you can determine which months you had to spend more in payroll and which months were less so that you can adequately subscribe an annual budget for the following year based on the information gathered in the statements. It offers the small business the chance to increase productivity or even save money at certain points within the year.