Payroll Tax Systems

Payroll Tax Systems have many outcomes including payroll courses and payroll software.

Many countries around the world operate a system of payroll taxation often known as “Pay as you earn”. This is sometimes abbreviated to PAYE. It is typical in European countries such as the UK and Ireland. It is applied to salaried workers who’s monthly or weekly earnings have little variance. It is essentially the practice of collecting taxes from employees as they are paid. Responsible personnel learn best practice techniques on payroll courses.

The benefit for governments collecting tax in this way is that the taxes are calculated as they are paid and recorded on site rather than leaving individuals to self report at the end of the year. It is also typically the responsibility of the employer to make these calculations and hold the money for the revenue service in question. This saves revenue services the cost of administrating these calculations. It also allows for the easy collection of social security charges.

Employees benefit from having their taxes calculated for them. This saves them the time and effort of calculating and submitting the taxes themselves when they could be doing something more productive. It does however mean that employees are reliant on others to properly file their taxes and ensure they aren’t over taxed. Of course they are not held responsible if their taxes are improperly filed.

For employers the benefits depend on what compensations tax legislation provides for them. They may be given tax relief or be able to claim the added expense against taxes levied on company profits. As the employer has to carry out its own salary administration it makes the most sense to have the employer cover this responsibility.

Depending on the size of a company the payroll tax calculations may be done by an accounting employee in house or if the company is smaller the payroll process may be outsourced to a specialist accounting service. Anyone responsible for calculating salaries will have received appropriate training through an accounting or payroll course.

For many small businesses that may only have two or three employees it may make sense for the employer to take payroll training through payroll courses themselves. Where the company has yet to become profitable enough to be able to afford a dedicated accountant or even to outsource their accounting the primary employer often oversees payment of salaries. This means they must become well versed in the requirements of the payroll system.

A payroll course will typical focus on areas such as outlining the difference between the different charges that may be included with the tax or added to it such as social security charges and studying the terminology involved.

Many companies produce specialist payroll software that enables accountants to quickly, easily and accurately calculate employee tax rates. Some of this software is written more generally and can be configured to local tax regulations allowing it to be sold widely. Other software is produced specifically for a tax area. Payroll courses predominantly deal with how to use these software systems correctly, configuring them for specific areas such as London and Dublin, inputting employee salaries and the particular relevant adjustments for each employee.