Calculating Payroll Deductions with Payroll Software

Keeping accurate payroll records is a main responsibility of small business owners, but calculating payroll deductions can be tedious and confusing without a good software tool. Payroll deductions apply to the employees on your payroll and pay for the various employment taxes and benefits for that employee. The calculations can be hard to understand, especially if you are doing the calculations by hand.



A quality payroll software eases the burden of these calculations, as much of the math is automated within the tool. AMS offers a cost-effective and easy-to-use payroll software for business owners looking for an expedited payroll system.


What Are Payroll Deductions?

Employers make a variety of mandatory and voluntary deductions based on employee preferences and federal and state laws. Mandatory deductions include federal income tax, FICA taxes, and state income taxes. FICA taxes cover Medicare and Social Security contributions for employees. Employers do not have to withdraw any pay from the independent contractors they may hire throughout the year, but employers do make these deductions every pay cycle for the employees on their payroll.

Employees can opt to have their employer withhold some voluntary deductions which contribute to benefits like health insurance or retirement plans. Together, the employer and employee should establish these voluntary deductions to make sure the employee is aware of the amount.

Calculating payroll deductions consists of converting an employee’s gross pay into net pay. From the adjusted pay, you then use the various deduction percentages for each tax or contribution to generate the deductions. Employers then use the totals of payroll deductions to complete year-end tax forms for their employees.


How a Payroll Software Can Help with Calculating Payroll Deductions

If the payroll deduction calculations seem daunting, the right payroll software can do the math for you. Some software resources will auto-fill the payroll dedication rates and use the gross pay you submit to perform the calculations. Additionally, since the system is digital, the software will store the records neatly so that you can locate any information you need.

Payroll software can save you time and frustration that payroll calculations can create. Small businesses can access a payroll software tool to make their operations more efficient.


AMS Payroll Software Is a Useful Additional for Your Business 

Our accounting and payroll software is a great investment for any employer looking to improve their payroll steps and alleviate the stress of doing payroll math. Calculating payroll deductions takes careful attention and accuracy, but a software tool can reduce the risk of error. The AMS add-on payroll module handles payroll check printing, payroll reporting, and payroll deductions.

In one software tool, employers can generate the forms they need when they need them and efficiently input employee information to make payroll a breeze. The modular approach of AMS products allows you to customize your payroll and tax software to suit your needs. If you have been struggling with calculating payroll on your own, consider AMS software to lighten your payroll load. Contact the Sales and Information Team at (800) 536-1099 with any questions.



Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.