What Are Online Payroll Deductions?

Felicia Dye
Felicia Dye
Man holding computer
Man holding computer

Online payroll deductions are a type of Internet-based payroll tool or service. These tools are generally online forms that make calculating the wages payable easier. The services are designed to make it easier for employers to calculate and to issue wages by automatically withholding sums from gross earnings. Once the service calculates the amount that should be paid out to each employee, the employer usually is given the option to issue payment through one of several methods.

Payroll deductions are sums of money that are to be subtracted from wages before payment is made. These can include items such as taxes, retirement account contributions, or child support. To calculate what portion of earnings should be deducted for such purpose versus the amount that should be paid out to an employee, the employer has a number of options. He could sit down and figure it out himself, hire an accountant, or purchase software for his computer.

An online payroll deductions calculator is an Internet-based tool that helps to make the task easier. These tools can range in sophistication, but they generally appear as forms. The appropriate information is inserted where needed. Upon completing the form, there will generally be a calculate command that, once activated, will determine how much should be withheld for each reason and the amount that should be paid out to the employee. As some of these are free, individuals can also use them to help determine how much they will be paid or will have deducted from their wages.

There are also online payroll deductions services, which generally require the payment of fees to utilize. These are often marketed as having numerous advantages over the other options. For example, when compared to software, online payroll deductions may be seen as the better option because, due to their use on the Internet, there is no need to install a program onto a person's computer. Also, when using an online service, an individual generally does not have to worry about updating the service, as he may have to do with outdated software.

Limited access is an issue that may arise with software that is also eliminated with online payroll deductions services. A person can process payments from any place where he has Internet access instead of being limited to computers where a particular program is installed. Online payroll deductions services often have features that allow additional tasks associated with payroll to be completed. These may include the ability to remit payroll taxes to the appropriate government agency, to print payroll checks, or to remit payment to employees through direct deposit.

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