Understanding What is Your Year-to-date (YTD) Payroll: The Basics
Running a business isn’t just about making money; it’s also about managing expenses. And if you’ve got a team, a big chunk of these expenses goes into their wages. Nestled in this realm of expenses is a term you need to get friendly with: Year-to-date (YTD) Payroll. Ready for a deeper dive? Let’s jump in!
Table of Contents
So, What is Year-to-date (YTD) Payroll?
Imagine starting a tally at the beginning of the year, where you keep adding up every dollar you pay out to your employees or freelance workers. By mid-year or year-end, this tally gives you the Year-to-date (YTD) Payroll. It’s essentially the grand total of what everyone earned, be it through their regular salary, overtime, bonuses, or other benefits.
And it’s not just about full-timers. If you’ve paid freelancers or contractors, their fees often find their way into this figure too. While it helps an employee understand how much they’ve pocketed so far, for a business, it’s a window into payroll expenses.
Read further with our blog on the Difference Between Gross and Net Income.
Why Does Year-to-Date YTD Payroll Matter for My Business?
YTD is like a health checkup but for your business’s finances. By glancing at your YTD payroll:
Budgeting Gets Easier:
Comparing your YTD payroll to your annual budget helps identify if you’re overspending or if there’s wiggle room for new hires or bonuses.
Tax Time Becomes Less of a Headache:
Knowing your payroll expenses can give you a head start in preparing for tax season, helping forecast potential tax amounts and ensuring you set aside enough to cover it.
Planning and Predicting:
With a clear YTD in view, you can better predict future payroll costs, potential bonuses, or even decide on potential raises.
YTD and Those Little Pay Stubs
Every payday, employees eagerly await their paycheque, often accompanied by a pay stub. This stub isn’t just a receipt; it’s a financial storybook. Alongside details of that month’s earnings, the stub highlights the YTD payroll figure, which means employees can track their earnings throughout the year.
Understanding this figure helps employees:
Plan Their Finances:
Knowing how much they’ve earned so far helps in setting savings goals or planning major purchases.
Prepare for Tax Time:
Just like businesses, employees benefit from knowing their YTD when prepping for taxes.
Crunching YTD Numbers: Here’s How
With Pay Stubs:
Collect pay stubs for each employee. Each stub has a YTD figure. Add these up for a total YTD payroll figure. Don’t forget any bonuses or extra payments made outside of the regular pay cycle.
Without Pay Stubs:
No biggie! Figure out what each employee earns every pay cycle, multiply it by the number of times they get paid, and then add everyone’s total together. Boom, you’ve got your YTD payroll.
YTD, More Than Just A Number
YTD Payroll isn’t just a tally on a sheet or a number on a screen. It’s the financial pulse of your operations. As you navigate the fiscal waters of the business year, knowing how to read this pulse becomes crucial. If streamlining this process sounds like a good idea, consider what PaymentEvolution has lined up for you.