Payroll glossary
36 small-business payroll terms defined in plain English — the vocabulary every U.S. employer eventually has to learn.
ACH (Automated Clearing House)
The electronic network U.S. banks use to move payroll funds between accounts.
Biweekly payroll
A 14-day pay period producing 26 (occasionally 27) paychecks per year.
Semi-monthly payroll
A pay schedule paying twice a month on fixed dates, producing 24 paychecks per year.
Weekly payroll
A seven-day pay period producing 52 paychecks per year, common in construction and union shops.
Monthly payroll
A 30-day pay period producing 12 paychecks per year, restricted by most state statutes to executive and salaried roles.
Pay period
The window of time worked that a paycheck covers — biweekly = 14 days, semi-monthly = roughly 15 days.
Pay date
The date funds are released to employees, typically a few business days after the pay period ends.
Gross pay
Total wages earned before taxes and other withholdings.
Net pay
Take-home pay after federal income tax, FICA, state tax, and any voluntary withholdings.
Federal holiday
One of eleven days codified at 5 U.S.C. §6103 on which the Federal Reserve and most U.S. banks close.
OPM (Office of Personnel Management)
The federal agency that publishes the official pay-period calendar and federal holiday observance schedule.
FLSA (Fair Labor Standards Act)
The 1938 federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards.
FICA
The Federal Insurance Contributions Act tax — Social Security (6.2%) plus Medicare (1.45%) on wages, paid by both employer and employee.
FUTA
The Federal Unemployment Tax — 6.0% on the first $7,000 of each employee's wages, paid by employers only.
SUTA
State Unemployment Tax — analogous to FUTA but levied by each state with state-specific wage bases and experience-rated rates.
Form W-2
The annual wage and tax statement employers furnish to each employee by January 31.
Form W-4
The federal employee withholding certificate that determines how much federal income tax to withhold each pay period.
Form 941
The employer's quarterly federal payroll tax return, filed by the last day of the month following the quarter end.
Form 944
An annual filing alternative to quarterly Form 941 for employers with small annual payroll tax liability ($1,000 or less).
Form 940
The annual employer FUTA tax return, due January 31 for the prior year.
IRS Publication 15 (Circular E)
The annually updated employer's tax guide that contains federal withholding tables and deposit rules.
Exempt employee
A salaried employee who meets the FLSA executive, administrative, professional, computer, or outside-sales test and is not entitled to overtime.
Non-exempt employee
An employee entitled to FLSA overtime pay (1.5× regular rate) for hours worked over 40 in a workweek.
Overtime
Wages owed at 1.5× the regular rate of pay for hours worked over 40 in a defined seven-day workweek (federal rule).
Prior business day rule
The convention of moving a pay date earlier when the scheduled date falls on a weekend or federal holiday.
Lookback period
The 12-month window the IRS uses to classify an employer as a monthly or semi-weekly depositor — July 1 through June 30 of the second prior year.
Semi-weekly depositor
An employer with $50,000+ of federal payroll taxes in the lookback period; deposits are due the Wednesday or Friday after each payday.
Monthly depositor
An employer with $50,000 or less of federal payroll taxes in the lookback period; deposits are due the 15th of the following month.
Next-day deposit rule
The IRS rule requiring a payroll tax deposit the next business day whenever a single payroll triggers $100,000 of accumulated federal tax liability.
Time-card cutoff
The deadline by which hourly employees must submit their hours for the closing pay period.
Direct deposit
Electronic payroll funding via ACH, settling typically 1–2 business days after the employer initiates the transfer.
PEO (Professional Employer Organization)
A co-employer that runs payroll, files taxes, and provides benefits as the employer of record for tax purposes.
EFTPS
The Electronic Federal Tax Payment System — the IRS-operated portal small employers use to schedule and pay federal payroll deposits.
Gross-up
The practice of increasing a payment to cover the recipient's tax liability so net pay equals an intended target amount.
Certified payroll
The weekly Form WH-347 (or state equivalent) reporting wages on federal Davis-Bacon construction projects.
Prevailing wage
The hourly wage and benefit rate set by the U.S. Department of Labor for federally funded construction work in a given locality.
How to use this glossary
The terms here come up constantly in IRS publications, state wage payment statutes, payroll software user interfaces, and conversations with bookkeepers. Click any term for a longer explanation with examples and links to the calendar pages and guides where it shows up. The list deliberately does not include personal-finance terms (gross income, marginal tax rate, refundable credit) — those belong on a tax site, not a payroll site.