Glossary of Terms and Definitions: Payroll, Insurance, HR and More
Whether you’ve been in business for years or for a day, there are many terms and phrases you may have never heard of. Our Glossary of Terms and Definitions breaks down the terminology you need to know in ways that are easy to understand.
A
Accrual Accounting
An accounting method that records revenues as they are fully earned and expenses as they occur.
Related Article: Cash vs. Accrual Accounting
Attribution Rate
The rate at which a company’s employees resign, retire, or leave and are not replaced.
Related Article: What is Attrition Rate?
Affordable Care Act Reporting (ACA Reporting)
Businesses subject to ACA and Applicable Large Employer and Self-Funded Plan requirements are mandated to submit all proper forms by their expected due dates in order to remain in ACA compliance.
Related Article: How to Manage ACA Reporting?
Arrears
Refers to the practice of compensating a service provider after the terms of the agreement have been met or that a business is behind on payments.
Related Article: What Does it Mean to Pay in Arrears?
Applicant Tracking System (ATS)
A software system used to collect, store, and analyze candidate information, filter applicants, and streamline the recruiting process.
Related Article: What is ATS?
Absence Management
The policies and procedures businesses develop to manage employee absenteeism in accordance with federal and state leave laws.
Related Article: What is Absence Management?
At-Will Employment
A working relationship where either the employer or the employee has the right to terminate employment at any time, with or without cause, and with or without warning.
Related Article: What is At-Will Employment?
Affordable Care Act (ACA)
The 2010 healthcare reform law designed to make healthcare more affordable and accessible to more people.
Related Article: What is the ACA?
Accountant
A financial professional that can record and prepare finances, conduct audits, and more.
Related Article: Accountant Resources
Annual Income
The amount one earns in a year.
Related Article: How to Calculate Your Total Annual Income
Administrative Services Organization (ASO)
An organizational model where specific HR tasks are outsourced to a third party without any “co-employment” arrangements.
Related Article: What is an ASO?
American Rescue Plan Act
Signed in 2021, this is a relief package aimed at helping businesses hit hardest during the COVID-19 pandemic.
Related Article: Tax Reporting Requirements Under American Rescue Plan Act
Accrual
The accumulation or increase of something over time, especially payments or revenue.
Related Article: What is Accrual Accounting
Automatic Gratuity
Classified by the IRS as revenue for the business and the dollars distributed to staff as non-tip wages.
Related Article: Understanding Service Charge vs Gratuity
Asset Depreciation
The decrease in the value of an asset over time.
Related Article: What is Asset Depreciation?
Accounts Receivable
Money or balance owed to a company from a customer.
Related Article: Understanding Accounts Receivable in Financial Statements
AI-Assisted Recruiting
Software solutions powered by artificial intelligence that optimize various stages of the hiring process.
Related Article: How AI is Used in Recruitment
Automated Clearinghouse (ACH)
Used to move money between bank accounts.
Related Article: What is ACH?
Adjusted Gross Income (AGI)
Total income from all sources minus certain adjustments listed on Schedule 1 of Form 1040.
B
Bi-Weekly Pay
The pay period in which employees receive their paychecks every 2 weeks.
Related Article: Understanding Biweekly Pay Periods
Business Insurance
Also referred to as commercial insurance, it is insurance coverage that provides financial protection to businesses who experiences an unforeseen loss that can range from small to large scale.
Related Article: What is Business Insurance?
Business Liability Insurance
Also referred to as general liability insurance, is a type of insurance coverage that helps protect a business against third-party claims of bodily injury, property damage or personal injury caused by your business.
Bereavement Leave
Paid or unpaid time away from work granted to employees after the passing of a covered individual.
Related Article: What is Bereavement Leave?
Bereavement Pay
Payment for the time an employee has taken off due to bereavement leave.
Related Article: What is Bereavement Pay?
Beneficial Ownership Information (BOI)
The information or details about the individuals who own or control a company.
Related Article: What is BOI?
Base Pay
Also referred to as base salary or an hourly rate, is the fixed amount an employee agrees to be paid for their work prior to beginning.
Related Article: What is Base Pay?
Benchmarking
The process of comparing industry and general business best practices against your own to identify performance gaps and achieve competitive advantages.
Related Article: What is Benchmarking in Business?
BOP Insurance
An acronym for Business Owner Policy, this is a type of bundled insurance policy business owners can have to protect their company and employees.
Related Article: What is a Business Owner's Policy (BOP)?
Business Equity
Often the key indicator of a company’s financial wellbeing, equity is useful in pursuing strategic growth or acquiring bank loans.
Related Article: What is Equity in Business?
Benefits Administration System
A solution or software offered by a third-party, like Paychex, that can manage employee benefits on behalf of a company.
Related Article: What is Benefits Administration?
Business License
A legal document that permits a business to operate within a specific jurisdiction.
Related Article: What is a Business License?
Bank Reconciliation
A schedule that illustrates the differences between the balance on a statement provided by the bank and the balance on the books of an organization at the end of a given period.
Related Article: What is a Bank Reconciliation?
Business Trends
Technologies, practices, and strategies that are affecting organizations across industries.
Related Article: Small Business Trends
Break-Even Point
The point where one is earning as much as they are spending.
Related Article: How to Calculate Break-Even Point
Break-Even Analysis
An analysis that paints a clear picture of pricing and financials allowing a business to make better financial decisions.
Related Article: What is a Break-Even Analysis?
BOI Reporting
The Beneficial Ownership Information reporting mandated by the federal government under the Corporate Transparency Act for some companies.
Related Article: What is Boi Reporting?
Bookkeeping
The process of keeping record of financial transactions.
Related Article: What is Bookkeeping?
Business Continuity Plan (BCP)
A strategy outlining how an organization will maintain or resume business functions during and after disasters, accidents, or threatening activities.
Related Article: What is a Business Continuity Plan (BCP)?
Buddy Punching
The act of an employee clocking in or out on behalf of another employee.
Related Article: Time Theft and Buddy Punching Explained
Bi-Weekly Pay
The pay period in which employees receive their paychecks every 2 weeks.
Related Article: Understanding Biweekly Pay Periods
Backup Withholding
A payer is required to withhold tax from payments not otherwise subject to withholding.
Background Checks
A service performed to confirm an applicant’s background information during the hiring process.
Related Article: Understanding Pre-Employment Background Checks
Boomerang Employee
A person who leaves their job for a period of time, then seeks to return.
Related Article: What is a Boomerang Employee?
Business Efficiency
How well a business can convert the required time, effort, materials, and capital in relation to its output.
Related Article: What is Efficiency In Business?
Business Legal Structure
All businesses must establish a legally recognized category of organization that influences how the business will operate regarding taxation and recordkeeping.
Related Article: Understanding Small Business Legal Structures
C
Cafeteria Plan
A program that allows money to be taken out of an individual's gross pay and can be used for items such as group health insurance premiums, qualified out-of-pocket medical expenses, and childcare.
Related Article: What is a Cafeteria Plan?
Cash Flow
The total amount of money transferred in and out of a business for a specified time.
Related Article: What is a Cash Flow Statement?
Commercial Auto Insurance
A critical component of insurance, particularly for contractors and delivery services, covering repairs or damage made to business vehicles.
Related Solution: Commercial Auto Insurance
Commuter Benefits
Programs or financial incentives for employees to ease the cost and time related to traveling between work and home.
Related Article: What Are Commuter Benefits?
Compensable Time
All hours considered time worked by an employee that must be compensated by the employer under applicable wage and hour laws.
Related Article: What is Compensable Time?
Compliance
Adherence to applicable laws, rules, and regulations as enforced by local, state, or federal government entities and agencies.
Related Article: The Hidden Cost of Non-Compliance for Your Business
Compliance Manager
The overseer of a company’s policies, standards, as well as changing laws and regulations to mitigate potential risks.
Construction Payroll Services
Solutions designed for streamlining payroll processes for construction and other skilled trades.
Related Solution: Payroll Services for Construction and Skilled Trades
Corrective Distributions
Refunds of excess contributions and any associated earnings made to highly compensated employees (HCEs) when a 401(k) plan fails nondiscrimination testing.
Related Article: What are Corrective Distributions?
Cost of Goods Sold (COGS)
The direct costs involved in producing goods or buying products for resale.
Related Article: What is Cost of Goods Sold?
Cost of Living Adjustment (COLA)
An increase in compensation intended to help employees maintain the value of their pay against inflation.
Related Article: What is a Cost-of-Living Adjustment (COLA)?
Cash Basis Accounting
An accounting method where income is recorded when actually received and expenses are recorded as they’re paid.
Related Article: What is Cash Basis Accounting?
Childcare FSA
Also known as dependent care FSA, allows employees to pay for certain services such as summer camp or child/adult daycare on a pretax basis.
Related Article: What is a Childcare FSA?
CalSavers
A California state-administered individual retirement account (IRA) program for employers that do not offer an employer-sponsored retirement plan.
Related Article: What is CalSavers?
Compensation Plan
A company’s set of guidelines for delivering employees’ base pay, bonuses, and equity.
Related Article: What is a Compensation Plan?
Cyber Liability Insurance
A type of business insurance coverage that offers financial protection in the event of an electronic data breach, cyberattack, or some other cybersecurity issue.
Related Article: What is Cyber Liability Insurance?
Consolidated Omnibus Budget Reconciliation Act (COBRA Insurance)
The continuation of group health, dental, and vision insurance coverages, as well as Health FSA and HRA benefits to certain employees and their qualified beneficiaries following termination or other qualifying events.
Related Article: What is COBRA Coverage?
Co-Employment
When utilizing a PEO, the employer and PEO, may enter into a contractual arrangement where they bear employer responsibilities for covered employees, not as joint employers but as independent contractors of each-other.
Related Article: Understanding Co-Employment Through a PEO
D
Direct Deposit Card
A form of payment, where employees receive their wages through a prepaid debit card. The card is not linked to the employee's bank account but is instead linked between the paycard vendor and a bank.
Related Article: What is a Direct Deposit Card?
Dependent Care FSA
A pre-tax benefit account used to pay for the various child and adult care programs that allow a caregiver to work.
Related Article: What is a Dependent Care FSA?
Direct Deposit
An electronic funds transfer (EFT) method that allows employers to automatically deposit an employee's earnings directly into their designated account(s).
Related Article: What is Direct Deposit?
Digital Nomad
A person who travels freely while working remotely.
Dental Insurance
A typically voluntary benefit plan that offers coverage for dental healthcare costs.
Related Article: Understanding Dental Insurance Options Through Employers
E
Employee Benefits
Wellness Programs, benefit solutions, or financial incentives offered to employees.
Related Article: Employee Benefit Trends
Employee Handbook
A tool that helps educate employees about management expectations and company policies and potentially serves as documentation in case of an employment dispute.
Related Article: Employee Handbook Services
Employee Retention
An organization’s ability to keep its employees over a specific period of time, often expressed as a percentage.
Related Article: Employee Retention Strategies
Employer Identification Number (EIN)
The 9-digit identifier from the IRS that allows your business to process payroll and file taxes.
Related Article: What is EIN?
Equity
The value of a business that can be returned to shareholders after deducting all liabilities from a balance sheet.
Related Article: What is Equity in Business?
Exempt Employee
An employee who is not entitled to minimum wage and overtime pay protections under the FLSA and state-specific requirements, typically paid on a salary basis.
Related Article: What is an Exempt Employee?
Expense Management
Visibility and insights into a company’s spending behaviors and policies.
Related Article: What Is Business Expense Management?
Extended Illness Bank (EIB)
A benefit that allows for extra PTO beyond the normal amount due to an extended illness or injury.
Employee Assistance Program (EAP)
Typically, a part of a larger benefits package, it provides employees sources to counseling, referrals, and other support services.
Related Article: What is an EAP?
Employers Liability Insurance
Insurance that helps with the financial cost associated with lawsuits against an employer resulting from workers who have suffered a job-related injury or illness not covered by workers’ compensation.
Related Article: What is Employers Liability Insurance?
Employment Practices Liability Insurance (EPLI)
A type of business insurance policy that helps cover company losses associated with certain employment claims alleging violations of the rights of a current employee, former employee or applicant for employment.
Related Article: What is EPLI?
Employee Value Proposition (EVP)
Asset of beliefs, attributes, and offerings used to attract and retain qualified employees.
Related Article: What is an EVP?
Employee Termination
The end of an employee’s time working with a company.
Related Article: What is Termination of Employment?
Employer of Record (EOR)
Similar to a PEO, but generally assumes responsibility for all facets of employment, such as payroll, benefits, taxes, and compliance.
Related Article: What is an Employer of Record (EOR)?
Employee Retention Tax Credit (ERTC)
This was the refundable payroll tax credit under the CARES Act in response to the COVID-19 pandemic, designed to incentivize businesses to keep employees on their payrolls.
Related Article: What is the Employee Retention Credit?
Electronic Federal Tax Payment System (EFTPS)
The tax payment service provided by the U.S. Department of Treasury.
Related Article: What is EFTPS?
EEO-1 Reporting
One type of equal employment opportunity reporting that requires certain employers to report demographic workforce data, including data by race/ethnicity, sex, and job categories.
Related Article: Checklist for EEO-1 and other HR reporting
F
Fair Labor Standards Act (FLSA)
Enacted in 1938, this law established federal standards for minimum wage, overtime pay, child labor, and recordkeeping for covered employees in the private sector and in most federal, state, and local government agencies.
Related Article: What to Know About FLSA
Family and Medical Leave Act (FMLA)
The federal law enacted in 1993, to provide unpaid leave to an eligible employee for a qualified reason to care for themself or a covered family member and to protect their job and health benefits while on a covered leave.
Related Article: What is FMLA?
Fed Med/EE
The Federal Medicare Employer-Employee tax. This is the tax that funds the federal Medicare health insurance and is paid by both the employer and the employee.
Fed OASDI/EE
The Federal Old Age, Survivors and Disability Insurance/ Employee Expense, more commonly referred to as the Social Security tax. This is the tax that funds the social security portion of FICA taxes and is paid by both the employer and the employee.
Federal Income Tax (FIT)
The federal income withheld based on an employee’s W-4.
Related Article: How to Calculate Federal Income Tax?
Federal Income Tax Withholding (FITW)
The federal deduction withheld from an employee's wages.
Federal Unemployment Tax
A payroll tax paid by employers alone, that funds federal unemployment compensation programs.
Related Article: Federal Unemployment Tax
Fiduciary
According to the IRS, a person who owes a duty of care and trust to another and must act primarily for the benefit of the other in a particular activity.
Related Article: Fiduciary Responsibility
Flexible Time Off (FTO)
A Paid Time Off (PTO) policy in which employees receive a set amount of PTO they can use at their own discretion, usually for vacation, sick or personal reasons.
Related Article: What Is Flexible Time Off (FTO)?
Flight Risk
Employees who are most likely to leave their employer due to dissatisfaction.
Related Article: Employee Flight Risk Signs
Form 1120-S
The IRS Form used to report income or gains, losses, tax deductions, and business tax credits for an S-corporation.
Related Article: What is Form 1120-S?
Form 147C
An IRS Form, also known as the EIN verification letter. Serves as the replacement confirmation when a business has lost or misplaced its original notice.
Fringe Benefits
A form of compensation, often from employers to employees, beyond the employee's normal wages. These employee fringe benefits can be property, cash, cash equivalents, discounts, savings accounts, and even non-tangible benefits like experiences.
Related Article: What Are Fringe Benefits?
Full-Time Employees
Employees who work full-time hours each week, typically with 40 hours serving as the standard benchmark.
Related Article: What is Considered Full-Time Employment?
Federal Insurance Contributions Act (FICA)
A tax both employers and employees must pay that fund Social Security and Medicare benefits.
Related Article: What is FICA Tax?
FICA Calculator
A calculator tool that can help determine payroll tax obligations.
Related Resource: How Do You Calculate FICA?
Form 941
The Employer's Quarterly Federal Tax Return, it reports wage withholding to the IRS for federal income taxes and both the employees' and employer’s share of FICA taxes.
Related Article: What is IRS Form 941?
Federal Unemployment Tax Act (FUTA)
A federal law that requires employers to pay a payroll tax used to fund unemployment compensation programs.
Related Article: What is FUTA?
Form 1120
The corporate tax return used by companies organized as a C-corporation.
Related Article: What is Form 1120?
Form 940
The Employer’s Annual Federal Unemployment (FUTA) Tax Return listing the total payments to all employees, reduced by any payments exempt fromFederal Unemployment Tax.
Related Article: What is Form 940?
Flexible Savings Account (FSA)
Also known as Flexible Spending Accounts or Flexible Spending Arrangements, this is a pre-tax account that employees can contribute to and spend on qualified out-of-pocket medical or dependent expenses.
Related Article: What is an FSA?
FSA Calculator
A calculator that can estimate possible healthcare savings and contributions associated with your Flexible Savings Account.
Related Resource: How Much Can I Save in an FSA?
Form 5500
An annual report, that informs the Department of Labor about a 401(k) plan's financial conditions, investments, and operations. This report also applies to certain employee benefit plans.
Related Resource: What is the Purpose of Form 5500?
G
Gen-Z Employees
Employees typically born between 1997-2012, who may just be entering the workforce.
Related Article: How To Attract Gen-Z Employees
Global PEO
A Professional Employer Organization that helps companies hire employees without having to set up legal entities in foreign jurisdictions and deal with related HR, Benefits, Payroll, Tax, and Accounting issues.
Government Shutdown
When Congress fails to pass or the president refuses to sign a spending bill to fund the federal government’s operations. This may affect its ability to pay its employees and keep facilities and buildings open where those employees work.
Related Article: What is a Government Shutdown?
Gratuity
Also known as tips, are voluntary monetary gifts patrons give to service workers, typically in recognition of good service.
Related Article: What is Gratuity?
Group Term Life (GTL) Insurance
A life insurance policy benefit businesses can offer to their employees that provides a death benefit (payment) to beneficiaries if the insured person dies during the coverage period.
Related Article: Is Group-Term Life Insurance Tax-Free?
HR Outsourcing
Using an experienced third-party provider to assist a business with specific HR functions.
Related Article: Benefits of Outsourcing HR
Gross Revenue
The total dollar amount gained from sales before deducting expenses, returns, discounts, or allowances.
Gross Income
The total amount of profit generated by a company, minus the cost of the goods sold.
Related Article: What is Gross Income?
General Liability Insurance
Also referred to as business liability insurance, is a type of insurance coverage that helps protect a business against third-party claims of bodily injury, property damage or personal injury caused by your business.
Related Solution: What is General Liability Insurance?
Gross Pay
The total amount an employee is paid before all applicable deductions.
Related Article: What is Gross Pay?
Gross Profit
Also known as Gross Income or Cost of Goods Sold (COGS), it is the total amount of profit generated by a company, minus the cost of the goods sold.
Related Article: What is Gross Profit?
Group Health Insurance
A health coverage benefit businesses can offer to its employees and their families.
Related Article: What is Group Health Insurance and How Does it Work?
General Ledger
A listing of individual transactions grouped by account.
Related Article: What is a General Ledger?
H
Health Savings Account (HSA)
An account employers can offer to their employees that offers tax advantages on funds set aside for qualified medical expenses.
Related Solution: What is a Health Savings Account (HSA)?
Human Resources Information System (HRIS)
A software solution that helps employers maintain and manage employee information.
Related Article: What is HRIS?
Human Resources Management System (HRMS)
An HR system designed to manage common HR functions, including but not limited to employee compensation, benefits, and performance.
Related Article: What is HRMS?
HR Compliance
The process of ensuring that a business adheres to applicable HR laws, regulations, and guidance from enforcing agencies, including developing policies and procedures that support adherence to those standards.
Related Article: What is HR Compliance?
HR Services
The services provided by a third-party, like Paychex, that aid a business in managing their workforce through administration or compliance support.
Related Solution: Full-Service HR Outsourcing
Human Capital Management (HCM)
A set of processes and tools that businesses use to systematically improve recruiting, management, and performance.
Related Article: What is Human Capital Management (HCM) & Why is it Important?
Human Resources (HR)
The internal or external business unit charged with ensuring a company's employees are equipped with everything needed to excel at their jobs.
Related Article: What is Human Resources (HR)?
Health Reimbursement Arrangements (HRA)
A reimbursement program fully funded by employers that supplement health insurance or is offered in place of a group health plan.
Related Solution: What is an HRA and How Does it Work?
High-Deductible Health Plan (HDHP)
A health plan where employees and employers often pay less in premiums, but plan participants may be expected to pay more out of pocket.
Related Article: How does an HDHP work?
Hazard Insurance
Coverage that helps with the costs of repairing or replacing the physical structures and equipment of a business after natural disasters.
Related Article: What is Hazard Insurance?
HR Business Partner (HRBP)
A human resource professional who integrates business strategy with people management practices by aligning HR processes to the business's overall goals.
Related Article: What is an HR Business Partner (HRBP)?
Hyperinflation
A severe economic condition characterized by an extraordinarily rapid increase in prices.
Related Article: How Much Should Wages Increase With Inflation?
HIPAA (Health Insurance Portability and Accountability Act of 1996)
Includes a privacy rule that addresses the use and disclosure of an individual’s private health information.
Related Article: What is HIPAA Law and What Does HIPAA Protect?
Human Resources Outsourcing (HRO)
Outsourcing specific HR functions or processes to a third party based on the needs of the business.
Related Article: Benefits of HRO
HR Analytics
The collection, analyzing, and interpretation of HR data for business improvement.
Related Article: Empower Your HR with Analytics
I
Imputed Income (IMP)
The taxable cash value of any non-cash, fringe benefits that employees may receive, such as a company car.
Income Statement
A statement for a company that shows revenue minus expenses equaling net income or loss for a specific period, e.g., for one month, one quarter, or for the fiscal or calendar year.
Related Article: What is an Income Statement?
Independent Contractor
Freelancers, contingent workers, and consultants, who are self-employed individuals who provide specific services for an agreed-upon fee and during a particular time frame. Definitions may vary under specific laws and agency regulations.
Related Article: What is an Independent Contractor?
Individual Retirement Arrangement (IRA)
A tax-advantaged personal savings account. Contributions may or may not be tax deductible depending on the type of IRA selected.
Invoice Factoring
A type of business financing where you sell your unpaid invoices to receive funds. Instead of waiting for customers to pay, a factoring company buys your invoices helping increase cash flow.
Related Article: What is Invoice Factoring?
Itemized Deductions
The subtractions made from a taxpayer’s Adjusted Gross Income.
Income Tax Withholding
The withholdings from your employees' paychecks to cover their federal tax obligations for the year.
Related Article: What is the Difference Between Payroll Tax and Income Tax?
Invoice Factoring
A type of business financing where you sell your unpaid invoices to receive funds to improve cash flow.
Related Article: What is Invoice Factoring?
Individual Tax Identification Number (ITIN)
The number issued by the IRS to individuals who do not have nor are eligible to receive a social security number.
Related Article: What is an ITIN?
J
Job Orientation
The initial welcome a company provides to the new hire.
Related Article: Job Onboarding vs. Orientation
Joint Employment
When an employee is employed by two or more companies who share responsibility for directing the employee’s work.
Related Article: Joint Employer Rule
L
Leader
An involved, constantly learning and reflecting boss to others.
Related Article: What is an Effective Leader?
Leadership
The ability to lead or influence a group or organization.
Related Article: What is Leadership?
Level Funded Health Plans
Health insurance plans that combine features of self-insurance and fully insured arrangements. Employers pay into a claims account, stop-loss insurance, and administration of the health plan by the third-party vendor.
Related Article: What Are Level Funded Health Plans?
Limited Liability Company (LLC)
One of several types of business structures, it combines a corporation's limited liability feature reducing the risk of an owner being held personally responsible for a company's debts and financial responsibilities — with the flow-through taxation that is used with a sole proprietorship.
Related Article: What is an LLC?
Long-Term Disability Insurance
An insurance coverage option with a longer waiting period designed to provide disability benefits over a long period of time for more serious illnesses or injuries.
Related Article: What is Long-Term Disability Insurance?
Leave of Absence
Authorized time away from work, generally requested during special life circumstances like childbirth, adoption, serious medical conditions, and more.
Related Article: What is a Leave of Absence?
Learning Management System (LMS)
A software or technology used to plan, implement and assess a specific learning program.
Related Solution: Learning Management System (LMS) for Employee Training
M
Management
The act of overseeing or directing other employees.
Manager
The overseer or boss of direct employees.
Related Article: How To Manage a Multigenerational Workplace
Medicare Tax
An aspect of the federally funded FICA taxes, providing medical coverage to those eligible.
Related Article: What is the Medicare Tax Act?
Minimum Wage
The lowest wage amount that covered employees can legally be paid which can vary by jurisdiction.
Related Article: What Are State Minimum Wages Rates?
N
Net Income
This is the amount of profit generated by a company after all expenses are accounted for.
Related Article: What is Net Income?
Non-Compliance
Failure to adhere to applicable laws, rules, and regulations enforced by local, state, and federal government entities and agencies.
Related Article: How to Avoid Non-Compliance
Non-Employee Compensation
Refers to payments made to workers who are not employees under the applicable laws for services provided. These workers are responsible for paying their own taxes, and they may not receive benefits.
Related Article: What is Non-Employee Compensation?
Net Pay
The total amount an employee is paid after all applicable deductions.
Related Article: Net Pay and Net Income: are They the Same?
Non-Exempt Employee
An employee who is entitled to minimum wage and overtime pay protections under the FLSA and state-specific protections; typically paid on an hourly basis.
Related Article: What is a Nonexempt Employee?
O
OASDI Tax
The Federal Old Age, Survivors and Disability Insurance/ Employee Expense, more commonly referred to as the Social Security tax. This is the tax that funds the social security portion of FICA taxes and is paid by both the employer and the employee.
Onboarding
The process of helping new hires adjust to their jobs, acquiring the skills and knowledge needed to contribute to the organization, and getting them up to speed on the social and performance elements of their new positions.
Related Article: Why is Onboarding Important?
Online Sales Tax
A form of taxation for goods and services purchased on the internet. When businesses operate in a state that requires them to collect sales tax, they must do so whether the sales are made in physical or digital locations.
Related Article: What is Online Sales Tax?
Open Door Policy
A workplace standard that empowers employees to communicate job-related topics or issues with leaders or immediate supervisors.
Related Article: What is an Open Door Policy?
Overhead Costs
The expenses associated with simply having functioning business.
Related Article: What are Overhead Costs?
Occupational Safety and Health Act (OSHA)
The act designed to provide a workplace for employees that is free from serious safety hazards.
Related Solution: What is Required for OSHA Safety Compliance?
Overtime Rule
The previous ruling associated with overtime pay and the legal obligation of a company to adhere to it under the FLSA.
Related Article: U.S. DOL’s 2024 Overtime Rule
Overtime Pay
Under the FLSA, the overtime pay rate is one and one-half times an employee’s regular rate for every hour worked beyond 40 hours in one workweek.
Related Article: What is Overtime Pay?
Owner’s Draw
A payment method where a business owner to withdraw money from their business for personal use.
Related Article: What is an Owner’s Draw?
Owners Distribution
Much like an Owner’s Draw, this is the term used for cash distributions made to owners of a corporation.
Related Article: Owner’s Draw vs. Distribution
On-Demand Pay
Also known as instant pay, allows staff to access income as they earn it typically for a flat, per-transaction fee.
Related Article: What Does On-Demand Pay Mean?
P
Pay Schedule
The regular frequency employees can expect to be paid for their work. Typically weekly, semimonthly, or biweekly.
Related Article: What is My Pay Schedule?
Paycard
A paperless method for paying your employees, generally resembling a credit or debit card.
Related Article: What is a Paycard?
Paycheck Protection Program Loans (PPP Loans)
The CARES Act added loans designed to provide economic relief to small businesses nationwide adversely impacted by COVID-19.
Related Article: What is the Paycheck Protection Program?
Payment Processing
The system that allows for financial transactions to be accepted and take place.
Related Solution: Payment Processing Services and Solutions
Payroll
A company’s employees and the amount they are entitled to be paid.
Related Article: Why Set Up Payroll for One Employee?
Payroll Accounting
A system that records and keeps track of payroll-related expenses, such as employees' wages, benefit costs, and payroll taxes.
Related Article: What is Payroll Accounting?
Payroll Company
A third-party organization that supports business owners by providing payroll processing, tax filing, and other related services.
Related Article: Choosing a Top Payroll Company
Payroll Deduction
An amount withheld from your employees' pay before they receive their net pay. These deductions cover certain authorized expenses, such as taxes, benefits plans, and savings initiatives like retirement contributions.
Related Article: What Are Payroll Deductions?
Payroll Manager
The overseer or controller of payroll processing for an organization.
Payroll Processing
The many steps involved in collecting information and then paying workers.
Related Article: How to Process Payroll
Paystub
Also known as a pay or wage statement, this is the document provided to employees at the time they receive their pay detailing their earnings, deductions, and net pay.
Pension Plan
An employee benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides retirement income or defers income until termination of covered employment or beyond.
Per Diem Allowance
Latin for “for each day.” It is the daily allowance employees can incur while on a business trip.
Related Article: What is Per Diem?
Point of Sale Systems (POS)
An integrated software system used for making sales, receiving payments, tracking inventory, and streamlining management tasks.
Related Solution: POS Options
Polywork
Sometimes referred to as “gig work” or “side hustle” is the act of taking on multiple forms of employment or work.
Related Article: What is Polywork?
Preferred Provider Organization (PPO)
A type of health insurance plan that offers a network of healthcare providers for an employee to choose from.
Related Solution: What is a PPO?
Premium Tax Credit (PTC)
A refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace.
Prevailing Wage
Rates of pay established by the U.S. Department of Labor, based upon a geographic location for a specific class of labor and type of project.
Related Article: What are Prevailing Wages?
Profit
The positive financial gain a business receives after subtracting the difference of the amount earned/sold and the amount spent.
Profit Sharing Plan (PSP)
An employer-sponsored plan, like a 401(k) which allows a business of any size to distribute part of the company's pre-tax profits to employees.
Related Article: What Is a Profit Sharing Plan (PSP)?
Progressive Discipline Policy
The process that employers commonly use to manage employee behavior, performance issues, and/or violations of company policy, escalating when employees repeatedly fail to meet expectations.
Related Article: What is a Progressive Discipline Policy?
Paid Family Leave Insurance (PFL)
An insurance plan to provide paid leave for qualified reasons to eligible employees that also helps protect your business from disruption and helps support the health and productivity of your employees.
Related Solution: What is Paid Family Leave?
Profit & Loss Statement (P&L)
A financial statement that businesses use to outline income and expenses over a specific period.
Related Article: What is a Profit and Loss Statement?
Paid Family Medical Leave (PFML)
A program or policy to provide eligible employees with paid time off work for qualifying family or medical reasons.
Payroll Service
A third party, like Paychex, that can simplify and complete payroll functions or processes based on the needs of a business.
Related Solution: Payroll Service Package Options
Part-Time Employees
Employees work a reduced schedule, typically less than 35-40 hours per week.
Related Article: What is Considered Part-Time Employment?
Payroll Outsourcing
An external processor to complete payroll processes on behalf of the business.
Related Article: What is Payroll Outsourcing & How Does it work?
Pay Plan
Also referred to as a compensation plan, it is system businesses use to define compensation to employees. Can include direct monetary pay and indirect benefits like health insurance or paid time off.
Pay Period
The regularly scheduled time when workers earn wages that will be paid to them on their next paycheck.
Related Article: What is a Pay Period?
Payroll Tax Withholding
The federal income tax employers generally must withhold from employees' wages.
Related Solution: Payroll & Business Tax Services
Payroll Calendar
The specific schedule companies adhere to that assists with budgeting and maintaining wage payment laws and regulations.
Related Article: Payroll Calendar for 2024/2025
PEO (Professional Employer Organization)
A company that supports another business with certain HR administrative tasks such as administering benefits, processing payroll and tax reporting, helping maintain compliance, and improving workplace safety.
Related Solution: What is a Professional Employer Organization?
Paid Time Off (PTO)
An employer-provided benefit where an employee has access to an amount of time off that is paid and may be used for personal reasons, vacation, or sickness.
Related Article: What is PTO and How Does it Work?
Pre-Employment Background Check
The screening of a candidate’s record done after an offer of employment has been made.
Related Article: Why Are Pre-Employment Background Checks Important?
Q
Quick Ratio Calculator
Also known as the acid test ratio, this financial metric evaluates a company’s ability to meet its obligations using its most liquid assets.
Quiet Quitting
The act of an unmotivated employee doing the bare minimum amount of work required to keep their job.
Related Article: What is Quiet Quitting?
Quiet Firing
The eventual resignation of an employee due to management’s intentional creation of a poor work environment.
Related Article: What is Quiet Firing?
Quarterly Taxes
Sometimes known as estimated taxes, these are tax payments made every quarter to the IRS for federal withholding.
Related Article: What Are Quarterly Taxes?
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
A flexible plan that allows employers to reimburse employees for individual health insurance premiums and other medical expenses.
Related Article: What is a QSEHRA?
R
Reimbursement
The common practice for employers to pay back their employees for certain business expenses.
Related Article: What is Reimbursement?
Retirement Account
An investment account designed to help one save for retirement.
Related Article: What is a Retirement Account?
Retirement Plan
An employer provided benefit that allows participants to contribute a portion of their paycheck to a retirement savings account.
Related Article: Different Types of Retirement Plans
Roth 401(k)
A feature in an employer-sponsored retirement savings plan where contributions are made post-tax and investments grow tax-free.
Related Article: What is a Roth 401(k)?
Roth IRA
Allows individual investors to save for retirement on an after-tax basis, up to certain contribution limits set by the IRS.
Related Article: What is a Roth IRA?
Recruiting
A strategy used for sourcing, attracting, and engaging qualified candidates to fill open positions within a business.
Related Article: How To Recruit Employees
S
S Corporation (S-Corp)
A corporation named for Subchapter S of the IRS Code, under which they are taxed.
Related Article: What is a S-Corp?
Sabbatical Leave
An extended period away from work granted to an employee for study, travel, or personal growth.
Related Article: What is a Sabbatical Leave Policy?
Salary
The pre-determined weekly amount an employee is paid in wages.
Related Article: What is a Salary?
SBA Microloan
A loan program that funds small business loans of up to $50,000, available to eligible startups and existing small businesses.
Related Article: What is a SBA Microloan?
Seasonal Employment
Positions created and filled to meet heightened business needs during specific times of the year. Typically lasting less than 6 months and most found in industries like retail, hospitality, agriculture, and accounting.
Related Article: Seasonal Employment Laws
Section 179 Deduction
The tax code that allows business taxpayers to deduct the cost of certain property as an expense when the property is first placed in service.
Self-Employed
An individual who freelances or works for themselves.
Related Solution: Self-Employed Benefits
Self-Employment Tax
The responsibility of a self-employed or freelance individual to pay both the employer and employee percentages of FICA taxes to the government.
Related Article: What is Self-Employment Tax?
SEP IRA
A specialized type of retirement account specific to business owners and self-employed individuals.
Related Article: What is SEP IRA?
Service Charge
An automatic gratuity or charge added to a bill.
Related Article: What is a Service Charge?
Social Security Tax
The federal tax benefiting certain individuals like those in old age or disabled, funded by both employers and employees.
Related Article: Social Security Tax
Sole Proprietorship
The simplest form of a business legal structure for independent workers.
Related Article: What is a Sole Proprietorship?
Succession Planning
The process of designing and implementing a plan for the continued operation of a business if members of its core leadership team retire, get promoted, or decide to move into new roles outside the organization.
Related Article: What Is Succession Planning and Its Purpose?
Short Term Disability Insurance
An insurance coverage option designed to provide partial income replacement to employees who are temporarily unable to work due to a non-work-related injury or illness.
Related Article: What is Short-Term Disability Insurance and How Does it Work?
Severance Pay
Pay and benefits sometimes offered to employees who leave the company through no fault of their own.
Related Article: What is Severance Pay and How Does it Work?
Semi-Monthly Pay
The pay period in which employees are paid twice monthly.
Related Article: Semimonthly Pay Periods
Simple IRA
An employer-sponsored retirement savings plan for businesses with 100 or fewer employees which requires employer contributions but offers simplified administration.
Related Article: What is a SIMPLE IRA Plan and How Does it Work?
Section 125
Employees can receive certain benefits on a pre-tax basis that can be used for certain group health insurance premiums, out-of-pocket medical expenses, and daycare.
Related Solution: Understanding a Section 125 Plan
Safe Harbor 401(k)
Allows an employer to be exempted from certain annual nondiscrimination testing that is required with a traditional 401(k) plan if the employer provides, among other things, contributions to employees' accounts that are fully vested, or have accelerated vesting, when made.
Related Article: What is Safe Harbor 401(k)?
Social Security Number (SSN)
The unique identifier assigned to all American citizens and certain non-citizens.
State Unemployment Insurance (SUI)
A mandatory federal-state program to fund unemployment compensation.
Related Solution: What is SUI?
State Unemployment Tax Act (SUTA)
The state-level tax paid by employers to fund unemployment compensation.
Related Article: What is SUTA?
T
Talent Management
The process of recruiting, hiring, developing, and retaining quality people. It includes talent attraction, hiring, onboarding, performance management, learning and development, employee experience, succession planning, and strategic workforce planning.
Related Article: Talent Management in HR
Talent Mapping
A strategic approach to help businesses anticipate and meet long-term hiring goals.
Related Article: What is Talent Mapping?
Tax Extension
A request for extra time to submit tax information to the IRS.
Related Article: Filing a Tax Extension
Tax Services
Professional services that manage a company’s tax obligations, ensuring compliance with all applicable laws or regulations.
Related Solution: Tax Services
Tax Write Off
Any business deduction allowed by the IRS for the purpose of lowering taxable income.
Related Article: What Are Business Tax Write-Offs
Taxpayer Identification Number (TIN)
The identifying number used by the IRS for administration of tax laws.
Time Clock
The software or station used for employees to clock in or out from work.
Related Solution: Time and Attendance
Tip
Also known as gratuity, are voluntary monetary gifts patrons give to service workers, typically in recognition of good service.
Related Article: What is a Tip?
Tip Pooling
A common practice in the restaurant industry in which restaurant employees combine their tips and divide them evenly among the tipped staff.
Related Article: What is Tip pooling?
Turnover Rate
The percentage of the number of employees that have left, divided by a company’s total amount of employees within a given period.
Related Article: Types of Turnover
Tax Deductions
Any amount reduced from one’s taxable income, generally reducing the amount of tax the individual may have to pay.
Tax Withholding
The amount of federal income tax withheld from your paycheck.
Related Article: How To Change Tax Withholding
Traditional IRA
Allows individual investors to save for retirement on a pre-tax basis, up to certain contribution limits set by the IRS.
Related Article: What is a Traditional Individual Retirement Account (IRA)?
Timecard
A physical or virtual card used to track an employee’s hours worked.
Related Article: Hands-Free Timecard Option
Tax Exempt
Income, revenue, or transactions that are free from tax at the federal, state, or local level.
Tip Credit
Unless prohibited by state or local law, allows an employer to credit a portion of an employee's tips toward the employer's obligation to pay minimum wage.
Related Article: What is a Tip Credit?
U
Unlimited PTO
A Paid Time Off policy that allows employees to take as much time off as they need—when they need it—as long as it doesn't interfere with their work.
Related Article: Unlimited vs. Flexible PTO
Umbrella Insurance
An extra layer of liability protection that covers costs beyond the limits of your existing business liability policies.
Related Solution: What is Commercial Umbrella Insurance?
V
Voluntary Time Off (VTO)
An employee benefit that allows workers to take paid time off to volunteer.
Related Article: What is Volunteer Time Off (VTO) and How Does it Work?
Voluntary Life Insurance
An optional life insurance policy that pays benefits to an employee’s beneficiaries upon their death.
Related Solution: Voluntary Benefits Solutions and Insurance Plans
Vision Insurance
A typically voluntary benefits plan offered by some employers to help cover optometrist visits, glasses, contact lenses, and qualified over-the-counter vision care expenses.
Related Solution: Explore a Voluntary Vision Plan
W
Wage Garnishment
A legal or equitable procedure where some portion of a person's earnings are withheld by court to pay a debt.
Related Article: What is a Wage Garnishment?
Wages
The regular payment made by an employer to an employee for hours worked
Related Article: Guide on How To Pay Employees
Work Culture
The collective beliefs, behaviors, and traits that shape how employees interact with one another and handle outside business transactions.
Related Article: Why Work Culture Matters
Workforce Management (WFM)
A strategy to deploy workers and resources to boost productivity across an organization.
Related Article: What is Workforce Management?
Workforce Management Software
A program that helps businesses maintain workforce performance, like employee scheduling and attendance, or other HR functions.
Related Solution: Workforce Management Software
Workforce Planning
The process of analyzing, forecasting, and planning workforce supply and demand by reviewing current staff, assessing personnel needs, and identifying gaps.
Related Article: What is Workforce Planning?
Workplace Safety
The measures and practices a business sets in place to help protect employees from injuries, illnesses and hazards in the workplace.
Related Solution: Benefits of a Workplace Safety Program
W-4 Form
The Employee's Withholding Certificate is an IRS form comprised of the withholding certificate, worksheets, withholding tables, and instructions, used to inform the employer how much federal income tax should be withheld from the employee's paycheck.
Related Article: What is a W-4 Form and What is it Used For?
W-2 Form
The Wage and Tax Statement form is an annual information return provided to an employee that lists taxable wages, income tax withholding, and withholding of Social Security and Medicare taxes.
Related Solution: W-2 Frequently Asked Questions
W-9 Form
The Request for Taxpayer Identification Number and Certification is an IRS form completed by an independent contractor or nonemployee to confirm their personally identifiable information.
Related Article: What is W-9?
Workers’ Compensation Insurance
A type of insurance that provides financial benefits to an employee who is injured or suffers an illness as a direct result of their job.
Related Article: What is Workers’ Compensation and How Does it Work?
Work Opportunity Tax Credit (WOTC)
A program that allows businesses to take advantage of a tax credit when they hire workers from specific groups.
Related Article: What is WOTC and How Does it Work?
Y
Yearly Income
The total amount of income one makes within a year.
Related Article: What is Annual Income?
#
1094-C
The IRS Form filed by employers offering health insurance under the Affordable Care Act.
Related Article: What is a 1094-C?
1099 Contractor
A self-employed, independent contractor subject to the self-employment tax.
Related Article: What is a 1099 Contractor?
1099 NEC
An annual information return listing the gross amount of payments made to an independent contractor during the calendar year.
Related Article: What is a 1099 NEC?
1099-K Form
The IRS Form used to report the yearly gross amount of transactions (e.g., digital payments, credit card/debit cards, store value of gift cards, payment apps, and online marketplaces) that go through third-party settlement organizations (TPSO).
Related Article: What is a 1099-K Form?
401(k) Plan
An employer provided employee benefit that allows participants to contribute a portion of their paycheck to a retirement savings account.
Related Article: What is a 401(k) Plan?
403(b)
A retirement plan similar to that of 401(k) plans but can only be offered to employees of nonprofit organizations or certain government employers.
Related Article: What is a 403(b)?
401(k) Contribution Limit
The maximum amount of money one can put towards their 401(k) account within 1 year.
Related Article: 401(K) Contribution Limits For 2025
Form I-9
The federally required employment eligibility verification form which establishes both an employee’s identity and whether they are eligible to work in the U.S.
Related Article: What is Form I-9?
1095-C Form
The Employer-Provided Health Insurance Coverage form reports information about the type of health insurance offered to applicable employees in the previous year.
Related Article: What is Form 1095-C and What is it Used For?
1095-A Form
The Health Insurance Marketplace Statement is for those who didn't have access to or chose not to take part in an employer-sponsored health insurance plan and instead went through the Health Insurance Marketplace in the previous year.
Related Article: What is Form 1095-A and What is it Used For?
1095-B Form
A tax form used to report certain information to the IRS and to individuals who are covered by the minimum essential coverage required by the Affordable Care Act.
Related Article: What is Form 1095-B and What is it Used For?
11099-NEC
An annual information return listing the compensation made to a nonemployee during the calendar year.
Related Article: What is a 1099-NEC Tax Form?
4-Day Work Week
An alternative working arrangement where employees work only four days per week often at the same full-time pay rate.
Related Article: What is a 4-Day Work Week?