Our list of payroll terms, tax forms, and their definitions will make running payroll with Square Payroll a painless experience. 

Payroll Terminology

Term Definition
Gross Pay The total amount paid to the employee on his/her paycheck before taxes are deducted.
Net Pay The amount of pay actually received by the employee after taxes are deducted.
Pay Period The period of time that the employee is receiving pay for. Square Payroll offers four pay period schedules: monthly, weekly, semi-monthly (2 pay periods per month), and bi-weekly (every two weeks).
Pay Date The day employees actually receive their pay. With Square Payroll, the pay date for direct deposit employees is 5 business days after the last day of the pay period.
Pay Stub Document given to employees with each paycheck breaking down the pay earned and the taxes withheld. Direct Deposit employees can view it through their Square Payroll employee account. Employers can download pay stubs in the History page in the Payroll section of the Square Dashboard and should provide them to their manual check employees.
Year To Date (YTD) Calendar year to the present day. Often used in the context of YTD Pay, referring to all paychecks paid to an employee for the year up to the current date.
Quarter To Date (QTD) Period of time from the start of a given quarter to the present day. Often used in the context of QTD Pay, referring to all paychecks paid to an employee in the current quarter up to the current date.
Paycheck Tips Tips paid out to your employee(s) for the pay period. This amount will be paid to your employee(s) through Square Payroll.
Cash Tips Amount in cash tips paid. This amount should already have been paid to your employee(s) and will not be sent in your pay run. Declaring cash tips ensures accurate tax reporting and documentation.
Employee Benefits Taxable benefit deductions and contributions for your employee(s) such as medical benefits and retirement plans.
Post Tax Deduction Recurring deductions from an employee’s post-tax income to help you manage things like wage garnishments and cash advance deductions.
Workers’ Compensation Insurance Provides wage reimbursement and medical benefits to employees injured while working. Commonly referred to as workers’ comp.
Reimbursement Method for paying back employees when they spend their own money on business-related expenses.

Payroll Taxes and Filings

Term Definition
Tax Payments Payments sent by Square Payroll to the IRS and your state payroll tax agency. Consists of tax amounts collected from the employer and employee over previous pay periods. Paid by Square Payroll monthly and quarterly (depending on the tax).
Tax Filings Forms sent by Square Payroll to the IRS and your state payroll tax agency on a quarterly basis. Documentation of the tax amounts paid to the state and federal government for the previous quarter.
Employer Taxes Payroll taxes assessed to the employer. Collected each time payroll is processed.
Employee Taxes Payroll taxes withheld from an employee’s paycheck. Deducted from the gross pay, resulting amount is net pay.
Employer Identification Number (EIN) Each business is assigned an EIN by the IRS when they register as a business. Required to sign up with Square Payroll. Visit Square Payroll: Employer Identification Number for more information.
State Employer identification Number (SEIN) This is required to make the appropriate tax payments and filings in your state. Your SEIN is different than your EIN. Every state has different requirements when it comes to registering and many states require registration with two separate agencies.
State Unemployment Tax Act (SUTA) An employer-paid state tax that provides unemployment compensation to those that have lost their jobs.State law determines individual state unemployment insurance tax rates.
Federal Unemployment Tax Act (FUTA) An employer-paid tax that provides unemployment compensation to those that have lost their jobs. Applied to the first $7,000 in wages and is calculated at a rate of 0.6%, unless you live in a credit reduction state such as California.

Payroll Tax Forms

Term Definition
Form W-2 Wage and tax report provided to all employees of a given employer showing wages earned and taxes withheld over the previous year. Generated by Square Payroll and filed by Square Payroll with the Social Security Administration (SSA). Employees should use info from W-2s to make their own year-end tax filings.
Form W-4 Employee tax withholding form. Used to determine an employee’s allowances and additional withholding, which in turn determine the amount of federal income tax withheld from their paychecks. With Square Payroll, direct deposit employees fill this info out themselves when they set up their account, while manual check employees have this info entered by the employer. Employers should maintain a copy of Form W-4 for each of their employees.
Form 8655 Reporting Agent Authorization form. This form authorizes Square Payroll to make tax payments and filings on an employer’s behalf. Completed by the employer/owner during sign up and submitted by Square Payroll to the IRS.
Form 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return. Filed by Square Payroll at the end of the year, this is a record of all FUTA Tax payments paid over the course of the year to the IRS.
Form 941 Employer’s Quarterly Federal Tax Return. Due the last day of the month following each quarter’s end. Contains a breakdown of federal taxes and wages paid over the quarter.
Form 944 Employer’s Annual Federal Tax Return. Due at the end of the year and contains a breakdown of federal taxes and wages paid over the past year. If you have historically been an annual filer, please contact us.
1099-MISC Form A tax report provided to all contractors of a given employer showing wages earned over the previous year.

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