 In this presentation we will take a look at other deductions and payment methods. It's important to note that we do have state taxes that we're going to have to deal with as well from state to state, and those are going to be things that will differ from state to state in terms of the calculations for taxes related to different states and different localities. However, note that taxes are going to be similar. We've seen basically every type of tax calculation has been invented already. So really we want to see what type of tax is being applied, how is the tax being applied, and then go through our similar process and see how to apply whatever tax rate is being put in place. Most states will follow the format of the federal taxes to some extent typically or possibly have a more simplified method, a flatter tax typically being a more simplified method. Some states will follow a similar kind of progressive tax system, similar and therefore we'd have to use the similar tables as we would use or some type of calculations that we would use for calculating the federal income tax FIT tax withholding. We have post tax deductions. Remember those are going to be things that are taxed basically after or these are going to be deductions that will happen after the tax has been calculated. So once we've calculated the tax within the calculation we then have those things like garnishments which are going to be court ordered type of items. So if there's some type of penalties that the court has required the garnishments will be needed to be paid to whoever buy the employer. So the employer then has the responsibility once again to make the payment on behalf of the employee by court order. Union dues if there's a negotiation that requires the union dues be taken out those are going to be things that are going to be required to take out other types of deductions not something that decreases the taxable income. Now the payment methods typically the classic payment payment method would be by check. We typically want to avoid of course payment by by just a cash payment mainly because it doesn't it's it's less secure that it's harder to have the internal controls over a cash payment and it usually doesn't meet the kind of requirements that we want to have for typical type of payments methods including being able to have a record of it. We want it to be traceable to have a record of it and we typically need now to inform our employees all the time with each payment one how much they're getting paid net which is on the check that's not that'd be given to them but we also want to tell them what their net pay is and what was deducted and how those deductions were calculated what their gross pay is and what the deductions were to get to net pay that should be and that will include federal income tax state income tax other types of of deductions social security and Medicare we want to give them that information both in terms of this particular check as well as the year-to-date information so to do that we typically the check stub will modify check stub where the payroll process can be a lot easier to give that information check will be traceable so if there's a problem with it we can typically go back and and find the problem or we can see if the check was cleared which is a huge case if we have a cash payment you know it's different it's more difficult to to to tie the cash that was pulled out of the bank account to the cash payment being made whereas a check of course we have that tracking trail that tracking trail that audit trail really useful to solve problems with payroll one of the areas that could have the most type of issues that come up with it checks are also pretty simple to do it's pretty easy to to set the check up and put a checks as part of our internal controls it's it's can lead to separation of duties that's that's pretty easy to do within the payroll system as well in terms of recording the checks signing the checks and distributing the checks we can have some separation so that to reduce the likelihood of fraud things like pre-numbered checks are really useful to happen the pre-numbering of the checks making it more difficult for theft of the checks to to happen because we can we have the numbering system and if there's any gap within the numbering system we can we can more easily detect if fraud has happened in that case so checks are going to be one way to have the payroll method and then of course we have the payroll method of the direct deposit method oh one more thing on the checks here the we probably want a separate checking bank account as well and that bank account what we'll do is we'll typically figure out how much is going to be paid out of the the bank account will deposit that amount into it for the entire payroll processing period will deposit whatever we need into the to the checking account every every pay period or every month and then we will make the payments directly out of the payroll account and that makes things a lot easier to track because now the bank really is tracking an account just with our payroll deposits in it rather than us going to our normal checking account if there's a payroll problem and trying to sort out which which of the checks are payroll checks and which are not it's a lot easier to solve those problems with the checks that are coming directly out of an account that just has payroll so oftentimes it's a really good idea to set up another checking account because then in essence you're having the bank do really close tracking to just the payments made for payroll which is which is nice the other method we the modern method we would use here would be the payment method of direct deposit and that has a lot of advantages to it because one it's going to produce it's going to reduce the processing time we don't have to process the payroll checks we don't have to manually deliver the payroll checks it can cause some problems with the separation of duties because with with payroll checks in terms of of processing the checks and then signing the checks and distributing the checks we could have separation of duties there whereas the direct prop deposits going to happen all automatically and and an automatic automated way but there's other ways to set up those separations of duties within the automated system so within a sophisticated system we can still put in place internal controls related to the direct deposit method the other problem that could happen with direct deposit is there are you know if someone doesn't have a checking account it doesn't have the capabilities on the employee side or it doesn't want to have a direct deposit system then that will be a problem for the direct deposit system so we've got to make sure that we have a system that will be able to be used by both the employer and the employee side setting up the system I could be something we want to make sure that we're setting up the internal controls for the system that could take some more complexity just in terms of the initial setup once set up however it should the direct deposit can run uh fairly smoothly and it can reduce costs in terms of the of the processing and it can also be something that we could say is is more green because we're not having the paper checks which is probably more of a you know the the real reason to do it is because not having the paper checks probably reduces costs by not printing checks and distributing checks and printing them out but the added benefit of saying hey we're paper we're more paperless in this format and therefore you know good a good company because we're going more paperless is nice to be able to do as well in terms of both being able to say that as well as in in practice good thing accounting I don't know anyone in accounting