Paper Trails

The Top Payroll Questions Your Employees Will Ask You

As a business owner, HR director or office manager, you are bound to get asked question after question about your company’s policies and payroll practices.  Continue reading to learn the important questions an employee will ask you and how you can answer them.

Gross income is the total amount of an employee’s check prior to any withholdings, deductions, wage garnishments or any other items being taken from that check.  For example, if an employee makes $20 per hour and works 40 hours per week, their gross income would be $800.

Net income is the amount that an employee takes home after all of their withholdings, deductions, etc have been taken from their paycheck.  These items could include:

  • income taxes
  • FICA taxes
  • retirement contributions
  • health insurance premiums
  • garnishments for things such as child support
  • and more

In the example above, the employee’s gross income is $800.  This employee has $150 withheld for payroll taxes, contributes $50 to their retirement account, and has $50 withdrawn for child support payments.  The employee’s net income will be $550.

It it important to have a time off policy in your company handbook that details things such as eligibility, accrual rates, using time off, time off balances, rollovers, etc.  PTO may be the most important benefit to offer employees, and employees will want to know their balances throughout the year.  Using a time tracking system, like isolved Time, allows employees to easily request time off and see their balances at anytime.  In the employee self-service tool, time off management is located under the Time and Attendance menu.  If your business tracks time manually, be sure to update these sheets frequently to reflect accurate balances.

Each employee’s tax situation will be unique to them.  The “new” W4 simplifies the process for the majority of employees.  Unless an employee has a unique tax situation, they should only have to choose one of the three options in Step 1 Box C.  Choose either Single or Married Filing Separately, Married Filing Jointly or Qualified Widow, or Head of Household.  Check out this video for more information on the “new” W4.


There are many items that may come out of an employee paycheck.  These include but may not be limited to:

  • income taxes
  • FICA taxes
  • retirement contributions
  • health insurance premiums
  • dental insurance or vision insurance payments
  • child support payments
  • student loan defaults
  • credit card debt payments
  • outstanding medical bills
  • bankruptcy payments
  • cell phone deductions
  • and more

Some of these items are taken on a pretax basis while others are post tax deductions.  You can read the differences between these two here.

Pretax deductions are items that are taken from an employee’s paycheck BEFORE taxes are taken on their pay.  These include items such as:

These types of deductions are beneficial to both the employer and employee as it lowers the tax liability for both parties. Although the tax liability may be lower in the short term, certain benefit deductions require taxes to be paid in the future.

For example, if employee earns $800 in their check and contributesw $50 to their 401(k), then only $750 will be taxed since this type of retirement contribution is a pretax deduction.

Overtime pay is the pay for any hours worked over 40 in a given 7 day period.  Your non-exempt employees must be paid overtime at 1.5 times their hourly rate for those hours.  For example, John is a non-exempt employee and works 50 hours one week.  John earns $20 per hour.  To calculate John’s wages, multiple 40 hours x $20 per hour = $800.  Then multiple 10 hours X $30 (1.5 times $20) = $300.  John would earn $1,100 this pay period.

Holiday pay is a fringe benefit that employers could offer employees.  This gives employees time to observe holidays or just spend time away from work and get paid for the day. Employers offer this so workers can have time off without forfeiting their normal wages or other paid leave.  Unlike overtime pay, which is a federal requirement, holiday pay is not required by law.

The answer to this question will depend on how your business would like to proceed.  You may choose to pay your employees a day early, or make them wait until the next business day to get paid.  If paying your employees a day before the holiday, make sure to submit your payroll on time to ensure timely processing.  Whichever way you decide, make sure to stick with this for all holidays and have a section in your employee handbook detailing your process.

An employer contribution is a payment made by the owner of the company to a certain benefit that the business offers its’ employees.  For example, employers may match the first 3% that employees contribute to their 401(k).  If an employee contributes $50 a week, the employer would contribute $50 as well.  Another type of contribution could be for health insurance.  Employers may pay a certain amount toward the company’s insurance plan, leaving the remainder for the employee to pay.

Making changes to personal information like direct deposits, updating names and addresses, or beneficiaries can be made on the isolved self-service portal for clients of Paper Trails.  If your business does not use an employee self-service portal where these changes can be made, contact your manager or HR department to have your information updated.

According to SSA guidelines, employers must distribute W2s to their employees no later than January 31st of each year.  If your business is a client of Paper Trails, employees can access an online copy of their W2 through the employee self-service portal by the middle of January.