Glossary M - R
M
Market Value: A key metric used to determine fair and competitive wages based on external industry data.
Medicare Tax: A federal tax withheld at 1.45% from both employers and employees to fund healthcare benefits.
Maximums: The upper limit of a pay range set by an employer for a specific role.
Midpoints: The middle value of a established pay range.
Monthly Pay: A pay frequency often reserved for high-salaried executives as it is the least expensive to process.
Management Reports: Documents generated to provide leadership with insights into labor costs and payroll trends.
Medical Expenses: Costs such as co-pays or prescriptions that can be deducted through an HRA.
Merger: A business action involving the combination of two entities, often requiring a specialized analysis of account balances.
Mentorship Programs: A retention strategy where experienced leaders advise employees to foster skill advancement.
Multiple Jobs Worksheet: A tool included with Form W-4 used to calculate accurate withholding for individuals with more than one job.
N
Net Pay: The "take-home" amount of an employee's earnings after all taxes and deductions are subtracted.
Non-exempt: Employees who are entitled to overtime pay (typically 1.5x their rate) for working over 40 hours a week.
Nonemployee Compensation: Payments made to independent contractors, which must be reported on Form 1099-NEC.
Nonresident Alien: An individual who is not a U.S. citizen and is subject to specific tax withholding procedures.
Notice 1036: An IRS document that provides early release copies of tax tables for income tax withholding.
Net Investment Income Tax: An "other tax" that may be included when calculating an individual’s required annual tax payment.
New Hire Documents: Critical records like Form I-9 and Form W-4 that must be collected and stored for every employee.
Non-monetary Advantages: Perks such as company culture or DE&I commitments used to attract talent when pay is not the primary driver.
Notice 8655: The Reporting Agent Authorization form used to notify the IRS that a payroll provider is authorized to handle a business's tax records.
Neglect (Willful): A legal term referring to the intentional failure to furnish a Taxpayer Identification Number (TIN), resulting in penalties.
O
Onboarding: The integration process for new hires, often streamlined by using an employee handbook.
Overtime Pay: Mandatory compensation for non-exempt workers at one and one-half times their regular rate.
Operating Agreement: A legal document for LLCs where a Board of Advisors can be formally established.
Overpayment: A scenario in tax penalty computation where the amount withheld exceeds the required installment.
Outsourcing: The strategic move of using a third-party provider to handle HR, payroll, and compliance tasks.
OMB (Office of Management and Budget): The federal agency that assigns control numbers to official tax forms like the W-4.
Online Payroll: Software that allows business owners to calculate and run payroll from a desktop or mobile app.
Optional Filing Method: Specific IRS-approved methods for reporting income from grantor trusts.
Autopilot: A feature in digital payroll platforms that automatically runs recurring payroll for salaried staff.
Over-the-counter Expenses: Certain non-prescription medical costs that may be tax-deductible through an HRA.
P
Payroll Taxes: The specific taxes (Social Security, Medicare, etc.) that an employer must calculate, deduct, and remit.
Pay Equity: The practice of providing comparable equal pay to employees with similar functions regardless of race or gender.
Pay Transparency: The legal requirement to disclose salary ranges in job postings or upon request.
Pay Ranges: The minimum and maximum compensation levels set for a specific job title.
People Analytics: Data-driven tools used to measure pay gaps and provide insights for organizational changes.
Pre-tax Deductions: Amounts taken from gross pay before taxes are calculated, such as retirement or health benefits.
Post-tax Deductions: Deductions taken after taxes, such as union dues or court-ordered garnishments.
Penalty: A financial charge imposed by the IRS or other agencies for underpayment or noncompliance.
Percentage Method Tables: IRS-provided charts used to manually calculate federal income tax withholding.
Projections (Financial): Forecasts that demonstrate a company’s long-term sustainability to potential investors or lenders.
Q
Quarterly Payroll Tax Returns: Regular filings (such as Form 941) used to report business taxes to federal and state agencies.
Qualifying Child: A dependent under 17 who allows a taxpayer to claim the Child Tax Credit.
Qualified Business Income: A deduction that allows small business owners to reduce their taxable income.
Qualifying Widow(er): A tax filing status that provides a specific standard deduction amount.
Qualifying Relative: A person for whom a taxpayer may claim a dependent credit on their withholding certificate.
Qualified Foreign Pension Fund: An entity subject to specialized Form W-9 reporting rules regarding foreign status.
Quarterly Board Meetings: Scheduled gatherings of directors that can provide tax write-offs for travel and dining.
Qualified Educational Expenses: Costs like tuition and receipts that may be tax-deductible.
Qualified Moving Expense: Specific reimbursements that may be excluded from income under IRS guidance.
Qualified Tuition Program: Payments made under Section 529 that require a TIN for information returns.
R
Retention: Strategic efforts to keep top talent and reduce the high costs associated with employee turnover.
Recruitment: The process of attracting and hiring new people, which is increasingly influenced by pay transparency.
Recurring Payroll: An automated feature that processes consistent employee pay cycles on "autopilot".
Roth IRA: A retirement account that can be funded with an employee’s earned income.
Reconciliation (Payroll): The bookkeeping process of matching payroll transactions to bank account balances.
Remitting: The act of sending withheld taxes and deductions to the appropriate government agency.
Return on Investment (ROI): The financial gain expected by venture capitalists or angel investors.
Required Annual Payment: The specific amount of tax an individual must pay throughout the year to avoid underpayment penalties.
Remote Workers: Employees who work from home or outside the primary office, requiring specialized job postings.
Reporting Agent Authorization: The legal designation (Form 8655) allowing a payroll service to act on behalf of a business.