I've been asked this question so many times, I figured it's time to get all details out online, to finally clear this up. Initially, it may seem that it's a straight forward answer, but, in fact, it's a bit more complex when you get to the details. In our calculations, and from what most payroll specialists say, is that it's based on the government tax structure, as a controlling entity. The government looks at a business and it's income as INCOME and EXPENSES for tax purposes. If they pay an EXPENSE inside a fiscal year, even though it's for services done in previous years, it is viewed as current years expenses. This may seem counterintuitive, but, it works out in the long run, as there is 2 things that occur:
- The word can be done in one Year and paid in the next
- There will always be balance if viewed from afar.
- Must pick which cycle date will be used for YTD, i.e., End-Date, Pay-Date,
- Hired Date does NOT necessarily coincide with Period-Start date.
- YTD uses the current year dates of receiving money to get totals