Payroll tax generally refers to two kinds of taxes:

Taxes which employers are required to withhold from employees’ pay, also known as withholding, Pay-As-You-Earn (PAYE) or Pay-As-You-Go (PAYG) tax; and taxes which are paid from the employer’s own funds and which are directly related to employing a worker, which may be either fixed charges or proportionally linked to an employee’s pay.

Payroll taxes have two names – pay as you earn and pay as you go. For the majority of us, we already know about pay as you earn payroll taxes. If you’ve ever held down a traditional job, you will realize on your checks that certain taxes are taken from the gross amount. The taxes that an employer has to take out include federal income tax, medicare tax, social security and possibly state and/or city taxes.

Structure of the Audit:-

A payroll audit should follow these six steps reflecting the key considerations of the payroll auditor. They are:

Step 1:-Payroll in your Organization
Step 2:-Setting up the Payroll
Step 3:-Supply of Information
Step 4:-Resourcing the Payroll Function
Step 5:-Payroll Security
Step 6:-Developing the Payroll Function