Namely Payroll Terminology

Glossary of terms around Namely Payroll and the payroll industry

FORMS

  • 1099: the document an employer provides to non-employees to report how much they were paid by the employer.  Typically, they are provided to a company’s independent contractors.  (In this situation, the independent contractor is not an employee of the company; rather, the company is a client of the independent contractor.)

  • W-2: the document an employer is required to send to each employee and to the IRS at the end of the year.  Reports the employee’s annual wages and the amount of taxes withheld from their paychecks.  A W-2c is a corrected copy of a W-2, fixing incorrect data on the original form.

  • W-3: the document an employer sends to the Social Security Administration each year, reporting the totals of all the wages and taxes on all of the W-2s issued to that company’s employees. A W-3c is a corrected copy of a W-3, fixing incorrect data on the original form.

  • W-4: the document an employee fills out to let their employer know how much they would like withheld in taxes (via filing status, exemptions, and any additional withholding).
     

PAYROLL PROCESSING

  • ACH: an automated clearing house.  This is the institution through which wires (i.e., funds, typically around payroll processing) are sent.

  • Additional Pay: an extra, non-standard type of pay that is added to an employee’s pay checks.  Can be one-off (e.g., bonuses) or recurring (e.g., cell phone reimbursement).

  • Credit: when Namely puts money into a client’s or employee’s bank account.  The employee’s paycheck is a credit to that employee.

  • Debit: when Namely withdraws money from a client’s or employee’s bank account.  Namely debits a company’s bank account to have the funds to pay that company’s employees.

  • Direct deposit: the process by which funds are deposited directly into an employee’s account on pay day, in contrast to the issuance of a paper check that the employee must take to the bank to deposit.  Bank is a term commonly used synonymously with “direct deposit”.

  • Gross pay: earnings before taxes and deductions are taken out.

  • Gross-Up: refers to when a paycheck’s gross pay is calculated backwards from a desired net pay.  Commonly used for bonuses/prizes where you want the employee to net a published amount, so you start with that number, then back into the taxes + the gross amount that needs to be paid to arrive at that desired net pay.

  • Insufficient funds: when a client’s bank account does not have the necessary funds to cover their payroll.  In these cases, a wire (or reverse funds wire) will be needed to cover the funding.

  • Manual Payroll: a payroll process that is kicked off separately from the regular pay schedule.  Can be used for any number of reasons, including yearly bonus payouts or to correct data on previously issued checks.

  • Monetary Return: a notification from NPC that it was not able to deposit funds into an employee’s bank account.  Commonly due to a closed account or an invalid account number.

  • NACHA (file): National Automated Clearing House Association (file).  A NACHA file is sent by Namely to NPC (our bank) and specifies how money is distributed to the employees at all our different clients on pay day.  Sometimes referred to as a funding file.

  • Net pay: earnings after taxes and deductions are taken out.  What the employee “takes home”.

  • NPC: National Payment Corporation.  Namely’s bank- i.e., where funds live before we send money out to our client’s employees on pay day

  • Non-monetary Return: a notification from NPC that it was able to deposit funds into an employee’s bank account, but that certain banking data may need to be updated (e.g., account number, routing number).

  • Pay Cycle: a period of time for which a person is paid.

  • Proration: the practice of adjusting earnings or deductions to account for a non-standard amount of work.  Typically used when a salaried employee starts or leaves in the middle of a pay cycle, and that employee will only get the appropriate portion of their pay for that pay cycle.

  • Reissue: the new check that may be issued to correct the mistake that was identified on a voided check.

  • Reverse Fund Wire (RFW): a type of wire in which the sender has authorized the recipient of the funds to initiate the money transfer.  Our clients may need Namely to initiate a reverse wire if we need funds ASAP.

  • Rollback: the process by which a client who has already submitted their payroll un-submits it- i.e., "rolls it back"- to make changes

  • Void: the process by which a previously issued check is negated.  This will have an effect on year-to-date numbers on the employee’s pay stubs.

  • Wire: a method of sending funds electronically.  Depending on the urgency of the funding, there are different options (and associated fees) for the wire, including same-day, one-day, two-day, etc.

     

NAMELY PAYROLL SETUP

  • Deduction: an amount of money that is taken out of the employee’s gross check.  Commonly, deductions cover benefits like medical, dental, vision, 401k, etc.

  • Demographic: a record of how the employee is categorized within a company, typically noting whether they’re full time/part time/contractor/etc., their office location, and their team.  

  • Garnishment: a legally-binding order (typically from a state agency or court) requiring a certain amount of money to be withheld from an employee’s pay check until a debt is satisfied.  Tax levies (i.e., unpaid taxes), child support, or liens are common garnishments.

  • Hour Benefit: a setting in Namely Payroll that lets you equate a certain dollar value with a particular type of earnings for a certain employee.  Commonly used to pay salaried employees some kind of pay based on an hourly rate (e.g., a salaried employee who needs a PTO payout based on a certain number of accrued hours- hour benefits lets you tell the system what the “hourly rate” would theoretically be for that employee).

  • Pay code/Earning code: a code under which work and wages are categorized- e.g., regular pay, overtime pay, sick pay, paid time off, etc.

  • Pay group: a subset of employees that an employer can create to make payroll processing easier.  For example, a company may have one pay group for regular employees who get paid on a certain schedule, then another pay group for contractors who may get paid on a different schedule.
     

TAX TYPES

  • FICA: Federal Insurance Contributions Act.  Defines Medicare and Social Security taxes.

  • FUTA: Federal Unemployment Tax Act.  Defines federal unemployment taxes paid by employers.

  • SDI: State Disability Insurance.  Defines state disability taxes paid by employees.

  • SUI: State Unemployment Insurance.  Defines state unemployment taxes paid by employees.

  • SUTA: State Unemployment Tax Act.  Defines state unemployment taxes charged paid by employers.
     

GENERAL TAX SERVICES

  • Abatement: the removal of penalties stated in a delinquency notice. 

  • Amendment: corrections to a tax return.  Namely frequently files amendments on behalf of clients for their payroll tax returns.

  • Delinquency: an unpaid/late tax bill for a client.

  • Power of Attorney (POA): the practice of Namely’s clients granting Namely legal authority to resolve tax concerns on the client’s behalf.

  • Tax Deposit: a payment made toward a tax bill.

  • Tax ID: a client’s identification number with the IRS/state tax agencies.

  • Third Party Access (TPA): the practice of Namely being given access to federal and state tax portals/accounts so they can navigate tax concerns on the client’s behalf.

  • Variance: any discrepancy in a tax account.  Variances can mean either that the client owes or is owed money, depending on the circumstances.

     

GENERAL PAYROLL

  • Exempt: a type of employee who is exempt (per federal guidelines) from receiving overtime pay- that is, the person is not overtime-eligible.  Exempt employees tend to be salaried employees.

  • FLSA: Fair Labor Standards Act.  The federal guidelines around how to classify certain employees as non-exempt or exempt.

  • Frequency: how often an employee is paid.  Bi-weekly = every two weeks and Semi-monthly = twice a month (typically, on set days, like the 15th and the last day of the month) are the most common, although monthly and weekly frequencies are also used.

  • General Ledger (GL): a record of all the financial transactions at a company.  It is a record of all the money that flows into or out of a company.  GLs are managed with different softwares, some of which can be fed by Namely's payroll processing data via a software integration (so the client has an updated record of the money that’s gone out the door to pay people and for taxes).

  • Imputed Income: the value of a benefit- frequently a non-cash benefit, like Group Term Life insurance- that must still be taxed as income.

  • Non-exempt: a type of employee who is not exempt (per federal guidelines) from receiving overtime pay- that is, the person is overtime-eligible.  While not mutually exclusive, non-exempt employees tend to be hourly employees.

  • Post-tax: money (e.g., deductions) that come out of a check after taxes have been deducted.

  • Pre-tax: money (e.g., deductions) that come out of a check before taxes have been deducted.  Health benefits (e.g., medical, dental, vision) are commonly pre-tax deductions.

  • Year to Date (YTD): running totals of wage/tax/deduction/etc. data on pay stubs.

Refer to this document: Key Terms in Payroll Processing