Glossary

This glossary defines common payroll terms, tax terminology, and ProPay-specific features used throughout the help documentation.

A

ABA routing number

Nine-digit bank identifier used for ACH and wire transfers. Also called routing transit number (RTN).

AccuWage

Social Security Administration software that validates W-2 electronic files before submission. Use AccuWage to check files for errors before transmitting to SSA.

ACH (Automated Clearing House)

The electronic network used for direct deposit and other fund transfers between banks. ProPay uses ACH for processing employee direct deposits and tax payments.

Accrual

The process of accumulating earned benefits (such as PTO or vacation time) over time based on hours worked or pay periods. ProPay automatically calculates and tracks accruals for each employee.

ASCII

American Standard Code for Information Interchange. A text format used for data import/export files. ProPay supports ASCII format for importing employee data and ACH file transmission.

ADMIN

ADMIN.EXE is the ProPay Time Clock program used by system administrators to set up company data, employee data, company policies, and create reports.

Attachment

A file attached to an email message. Binary files and formatted documents must be encoded before sending and decoded once received.

Automatic client billing

A ProPay feature that generates monthly client invoices based on check volume or flat fees.

Automatic client scheduling

A ProPay feature that tracks client payroll schedules based on call priority.

B

Backup withholding

Federal income tax withholding required when an employee fails to provide a valid Social Security Number or when the IRS notifies the employer that backup withholding is required.

Batch printing

Printing tax forms for multiple clients in a single operation. Load the printer with blank paper, and ProPay prints all forms automatically.

Bitmap file

A .BMP image format used by ProPay for signatures and logos on checks. Scan signatures or logos and save as bitmap files in the ProPay directory. See Signature on Checks.

C

Calculator

ProPay provides a pop-up calculator that functions just like a physical calculator.

Calendar

ProPay provides a pop-up calendar. See the Utilities topic for usage details.

Client

In ProPay, a client refers to a business entity (company or employer) for which you process payroll. Each client has their own employees, tax information, and payroll settings.

Credit reduction state

A state with outstanding federal unemployment insurance loans, reducing the FUTA credit available to employers in that state.

D

Database

A collection of information organized so that a computer program can quickly select desired pieces of data. ProPay organizes data by fields, records, and files.

Deduction

An amount subtracted from gross pay, including taxes, benefits, and garnishments.

Default

A value or setting that a device or program automatically selects if you do not specify a substitute.

Deposit schedule

The IRS-assigned frequency for making federal tax deposits: monthly or semi-weekly. Based on the employer's lookback period liability.

Direct deposit

The electronic transfer of employee pay directly to their bank accounts via the ACH network. Payments can be split among multiple accounts.

E

EDD

Employment Development Department. California's state agency administering unemployment insurance, disability insurance, and paid family leave.

EFTPS

Electronic Federal Tax Payment System. The IRS system for transmitting federal tax deposits electronically. See EFTPS Batch Provider.

EIN

Employer Identification Number. The nine-digit IRS identifier assigned to businesses for tax reporting purposes.

Email

Electronic mail transmitted over networks. ProPay can send reports and notifications via email.

Employee direct deposits

ACH transfers from an employer's bank account to employees' personal accounts. ProPay automates the direct deposit file creation process.

Exempt employee

An employee exempt from overtime requirements under the Fair Labor Standards Act (FLSA). Typically salaried professional, executive, or administrative positions.

Export

To format data so that it can be used by another application. ProPay exports data in various formats for use with accounting software and reporting tools.

F

Federal income tax withholding

The amount withheld from employee paychecks for federal income tax, calculated using the employee's W-4 elections and IRS withholding tables.

FICA

Federal Insurance Contributions Act. The combined Social Security (6.2%) and Medicare (1.45%) taxes paid by both employees and employers.

File ID

A unique identifier assigned to each client in ProPay. The File ID organizes and locates client data files.

Form 940

Employer's Annual Federal Unemployment (FUTA) Tax Return. Reports annual FUTA tax liability.

Form 941

Employer's Quarterly Federal Tax Return. Reports income tax withheld, Social Security, and Medicare taxes.

Form 944

Employer's Annual Federal Tax Return. An annual alternative to Form 941 for small employers with $1,000 or less in annual liability.

Form 1099

IRS information returns reporting income other than wages. Form 1099-NEC reports non-employee compensation paid to contractors.

Form 8655

Reporting Agent Authorization. IRS form authorizing a payroll service to file taxes on behalf of employers.

Form I-9

Employment Eligibility Verification. Federal form confirming an employee's identity and work authorization.

Form W-2

Wage and Tax Statement. Annual form provided to employees showing wages earned and taxes withheld during the calendar year.

Form W-3

Transmittal of Wage and Tax Statements. The summary form accompanying W-2s filed with the Social Security Administration.

Form W-4

Employee's Withholding Certificate. Form completed by employees to determine federal income tax withholding.

FUTA

Federal Unemployment Tax Act. Employer-paid tax funding the federal unemployment insurance program.

G

Garnishments

Court-ordered or agency-mandated deductions from employee pay for obligations such as child support, tax levies, or creditor judgments. ProPay tracks balances and exempt amounts automatically.

Gross Pay

Total employee earnings before any deductions are applied.

H

Handle

A number that the operating system assigns temporarily to a file when it is opened.

Help

Online documentation accessed by pressing F1 or clicking the Help button. ProPay's help system is context-sensitive.

Host

A computer system accessed by users working at remote locations.

I

Impound balance

Payroll taxes held in escrow by the payroll processor pending payment to government agencies.

Import

To bring data from another application into ProPay.

ISP

Internet Service Provider. A company providing internet access.

L

Local tax forms

ProPay supports custom-designed local tax forms that can be printed in batch processing mode for all clients.

Local tax tables

Tax tables for local jurisdictions. ProPay includes common local tables, and you can create custom tables as needed.

Lookback period

The 12-month period (July 1 through June 30) used to determine an employer's deposit schedule for the following year.

M

Magnetic media filing

Electronic filing of wage and tax information with government agencies via the internet.

Medicare tax

The 1.45% FICA tax paid by both employees and employers, with no wage base limit. High earners pay an additional 0.9% employee-only tax.

MICR

Magnetic Ink Character Recognition. ProPay can print checks on blank stock with MICR-encoded bank information, eliminating the need for pre-printed check stock.

Multi-state tax forms

ProPay supports custom tax forms for any state, printable in batch mode for all clients.

Multi-state tax tables

ProPay provides tax tables for nearly all states. Users can update tables as needed.

N

NACHA

National Automated Clearing House Association. The organization governing the ACH network and electronic payment standards.

Net Pay

Employee take-home pay after all deductions are subtracted from gross pay.

Network

A group of two or more computer systems linked together to share resources.

Non-exempt employee

An employee entitled to overtime pay under the Fair Labor Standards Act (FLSA). Must be paid at least 1.5 times regular rate for hours over 40 per week.

NSF

Non-Sufficient Funds. Indicates an account lacks funds to cover a transaction.

O

On-screen help

Context-sensitive help that displays information relevant to your current task. Press F1 or click the Help button.

Overtime

Hours worked beyond 40 per week by non-exempt employees. Typically compensated at 1.5 times the regular hourly rate.

P

Pay Date

The date employees receive their paychecks or direct deposits.

Pay Period

The recurring timeframe for calculating employee pay: weekly, biweekly, semimonthly, or monthly.

Paysoft

The software company that develops and publishes ProPay, ProClock, and related payroll solutions.

Peer-to-peer

A network type where each workstation has equivalent capabilities. Differs from client/server architecture.

PFL

Paid Family Leave. State programs providing wage replacement for employees taking time off to bond with a new child or care for family members.

PFML

Paid Family and Medical Leave. State programs combining family leave and medical leave benefits.

POP3

Post Office Protocol. A standard protocol for retrieving email from a mail server.

Port

An interface on a computer for connecting devices such as printers, modems, and storage.

Post-tax deduction

A deduction taken after taxes are calculated, such as Roth 401(k) contributions or wage garnishments.

Pre-note

A zero-dollar ACH test transaction used to verify bank account information before processing actual direct deposits.

Pre-tax deduction

A deduction taken before tax calculations, reducing taxable income. Examples include 401(k) contributions and health insurance premiums.

ProClock

Paysoft's time and attendance software that integrates with ProPay. ProClock tracks employee punches and transfers hours to ProPay for payroll processing.

ProPay

Paysoft's comprehensive desktop payroll software for CPAs, bookkeepers, and payroll service providers.

ProPay WEB

The web-based interface allowing employees to access pay stubs and W-2 forms online. Employers can also submit payroll information remotely.

PTO

Paid Time Off. A benefit providing employees with paid leave for vacation, sick days, or personal time. ProPay tracks accruals, usage, and balances.

R

Recalc

A ProPay function that recalculates taxable wages and tax liabilities after changes are made.

Reporting agent

An entity authorized via Form 8655 to file employment taxes on behalf of employers.

S

SDI

State Disability Insurance. Employee-funded short-term disability coverage required in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico.

Server

A computer on a network that manages resources such as files, printers, and applications.

SMTP

Simple Mail Transfer Protocol. The standard for sending email between servers.

Social Security tax

The 6.2% FICA tax paid by both employees and employers, subject to an annual wage base limit.

Software license

The authorization code enabling ProPay. Renewed annually via Utilities > License Updating.

Speed entry

A ProPay mode optimized for entering payroll data during client phone calls.

SSA

Social Security Administration. The federal agency that receives W-2 filings and administers Social Security benefits.

State income tax withholding

State income tax withheld from employee pay based on state tax tables and employee elections.

SUI

State Unemployment Insurance. Employer-paid state taxes funding unemployment benefits. Interchangeable with SUTA.

SUTA

State Unemployment Tax Act. The state-level unemployment tax paid by employers.

T

Tax deposit

Payment of employment taxes to the IRS via EFTPS or other approved methods.

Tax impounding

Collecting and holding employer payroll taxes in escrow until payment is due to government agencies.

Tax liability screen

The ProPay display showing accrued taxes, payments made, and outstanding balances.

Taxable wages

Employee earnings subject to a specific tax after applicable exclusions and limits are applied.

TDI

Temporary Disability Insurance. Another name for SDI used in some states.

Telephone automatic dialing

A ProPay feature that dials client phone numbers from within the program when used with a telephone headset.

W

Wage Base

The maximum earnings subject to a particular tax. For example, Social Security tax applies only to wages up to the annual wage base limit.

Withholding

Amounts deducted from employee pay for taxes and other obligations.

Workstations

Computers linked in a network, typically used for moderate computing tasks.

X

XML

Extensible Markup Language. A format for structuring data used in electronic filing and data exchange between applications.