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Core Payroll Concepts

  • 29% of exam
  • Worker Classification FLSA Employment Taxes Benefits Forms Pay Timing

Compliance Research

  • 17% of exam
  • Research Recordkeeping Reporting Deposits Penalties Source Hierarchy

Paycheck Calculation

  • 24% of exam
  • Gross-to-Net Overtime Taxable Wages Garnishments Pre-tax Deductions Fringe Pay

Process + Systems

  • 7% of exam
  • Master Data System Controls BCP Access Batch Totals

Administration Management

  • 7% of exam
  • Policies Procedures Service Agreements Communications

Audits

  • 8% of exam
  • Internal Controls Audit Prep Reconciliations Exceptions Evidence

Accounting

  • 8% of exam
  • Journal Entries Liabilities Clearing Accruals Corrections

Quick Facts

  • Exam FPC
  • Credential Fundamental Payroll Certification
  • Owner PayrollOrg
  • Questions 150
  • Time 3 hours
  • Prereq No experience required
  • Result Pass/fail scaled
  • Largest area Core payroll 29%
  • Law dates Jan 2025/2026

Worker BFR CO

  • BFR: behavioral, financial, relationship.
  • Behavioral: control Financial: economics Relationship: permanence

Employee vs Contractor CO

Employee

  • Control how work
  • Payroll taxes
  • Form W-2

Contractor

  • Controls result
  • Business risk
  • Form 1099-NEC
  • Control drives status

Worker Form Picker CO

  • Worker under control → Employee ( Payroll taxes )
  • Business controls result → Contractor ( 1099 path )
  • Status unclear → Form SS-8 ( IRS help )
  • Employee withholding → Form W-4
  • Contractor TIN → Form W-9
  • Nonemployee report → 1099-NEC
  • Employee wages report → Form W-2
  • Missing TIN → Backup withholding

Worker Classification CO

  • Employee Employer controls work
  • Contractor Controls results
  • Common law Facts and control
  • Behavioral How work done
  • Financial Business economics
  • Relationship Benefits and continuity
  • Form SS-8 IRS status request
  • Form W-9 Contractor TIN
  • Form W-4 Employee withholding
  • 1099-NEC Nonemployee pay

W-4 vs W-9 CO

W-4

  • Employee withholding
  • Federal income tax

W-9

  • Contractor TIN
  • 1099 setup
  • Worker status first

FLSA Pay CO

  • Nonexempt Overtime eligible
  • Exempt No overtime rule
  • Workweek Fixed 168 hours
  • Overtime Over 40 hours
  • Regular rate OT base rate
  • Bonus May affect OT
  • Unauthorized OT Still payable
  • Comp time Public sector limit
  • Salaried nonexempt Track hours
  • Rounding Neutral practice

Exempt vs Nonexempt CO

Exempt

  • Duties/salary tests
  • No OT required

Nonexempt

  • Track hours
  • Overtime eligible
  • Title is irrelevant

Employment Taxes CO

  • FIT Employee income withholding
  • FICA SS and Medicare
  • Employer FICA Matching share
  • FUTA Employer unemployment
  • SUTA State unemployment
  • Additional Medicare Employee-only withholding
  • Form W-4 Withholding certificate
  • Lock-in letter IRS withholding order
  • Tax deposit EFTPS remittance
  • Form 941 Quarter employment return

Forms Calendar CO

  • 941 quarters, 940 annual, W-2 yearly.
  • 941: quarters 940: FUTA W-2: employee 1099: contractor

Form 941 vs 940 CO

Form 941

  • Quarterly employment taxes
  • FICA/FIT reporting

Form 940

  • Annual FUTA
  • Employer unemployment
  • Quarterly vs annual

Compliance Calendar CO

  • Quarter employment taxes → Form 941
  • Annual FUTA taxes → Form 940
  • Employee wage statement → Form W-2
  • Correct W-2 → Form W-2c
  • Deposit due → EFTPS
  • Unclaimed wage → Escheatment
  • Retention question → Official rule
  • Penalty notice → Research first

Forms Reporting CO

  • Form 941 Quarterly employment taxes
  • Form 940 Annual FUTA return
  • Form W-2 Employee wage statement
  • Form W-3 W-2 transmittal
  • Form W-2c Correct W-2
  • 1099-NEC Nonemployee compensation
  • Form 945 Nonpayroll withholding
  • Form 1096 1099 transmittal
  • New hire State report
  • Backup withholding Missing TIN risk

Deposit vs Report CO

Deposit

  • Move tax cash
  • EFTPS deadline

Report

  • File return
  • Form deadline
  • Paying vs filing

Deposits Records CO

  • Monthly depositor Monthly deposit schedule
  • Semiweekly depositor Accelerated deposit schedule
  • Lookback period Schedule determination window
  • Next-day rule Large tax deposit
  • EFTPS Federal tax deposits
  • Record retention Keep payroll evidence
  • Escheatment Unclaimed wages
  • Penalty notice Research before response
  • Due date Calendar control
  • Source hierarchy Use official guidance

Gross-to-Net CA

  • Gross, tax, deductions, net.
  • Gross: earnings Tax: mandatory Deduct: elections/orders Net: paid

Pretax vs Post-tax CA

Pretax

  • Before selected taxes
  • Plan rules govern

Post-tax

  • After tax withholding
  • Net pay impact
  • Tax base changes

Paycheck Picker CA

  • Need gross pay → Rate x hours
  • Over 40 hours → FLSA overtime
  • Bonus is nondiscretionary → Regular rate
  • Pre-tax elected → Reduce eligible wages
  • Order received → Garnishment sequence
  • Noncash benefit → Imputed income
  • Net target → Gross-up
  • Prior underpay → Retro pay

Gross-to-Net CA

  • Gross pay Before deductions
  • Taxable wages Tax calculation base
  • Pre-tax deduction Reduces some taxes
  • Post-tax deduction After taxes
  • Disposable earnings Garnishment base
  • Net pay Employee take-home
  • Regular pay Straight-time wages
  • Overtime premium Extra half-time
  • Retro pay Prior-period adjustment
  • Imputed income Taxable noncash value

Gross vs Taxable Wages CA

Gross

  • All earnings
  • Before exclusions

Taxable

  • Tax base
  • After allowed exclusions
  • Not always equal

Garnishments CA

  • Garnishment order Court/agency directive
  • Child support Priority withholding
  • Creditor garnishment CCPA limits apply
  • Tax levy Government collection
  • Bankruptcy order Court priority
  • Disposable pay After mandatory deductions
  • Voluntary deduction Employee-authorized amount
  • Protected worker No discharge
  • Remit date Order controls timing

Benefits Fringe CA

  • Fringe benefit Compensation in kind
  • De minimis Small occasional benefit
  • GTL Imputed over limit
  • Company vehicle Personal use taxable
  • Section 125 Pre-tax benefits
  • 401(k) deferral FIT reduction only
  • Reimbursement plan Accountable plan rules
  • Moving expense Usually taxable
  • Award Taxability depends facts

Systems Controls SY

  • Master file Employee data source
  • Access roles Least privilege
  • Segregation Separate duties
  • Batch totals Input completeness
  • Exception report Find outliers
  • Audit trail Change evidence
  • BCP Continuity plan
  • Encryption Protect payroll data
  • Direct deposit Banking controls
  • Time system Hours source

Admin Policies AD

  • Payroll calendar Processing roadmap
  • Procedure manual Repeatable steps
  • SLA Service expectation
  • Approval matrix Authority map
  • Communication Explain pay issues
  • Intradepartment agreement Shared responsibility
  • Training Consistent execution
  • Escalation Issue routing

Control ACE AU

  • ACE: access, controls, evidence.
  • Access: least Controls: tested Evidence: retained

Audit vs Reconcile AU

Audit

  • Control testing
  • Evidence review

Reconcile

  • Match balances
  • Find differences
  • Test vs match

Control Picker AU

  • New hire setup → Master file review
  • Payroll input → Batch totals
  • Sensitive access → Least privilege
  • Unusual pay → Exception report
  • Payroll complete → Reconciliation
  • System outage → BCP
  • Audit request → Source evidence
  • Error recurring → Root cause

Audit Reconciliation AU

  • Pre-audit Before payroll review
  • Post-audit After payroll review
  • Variance Unexpected difference
  • Reconciliation Match reports
  • Source document Evidence record
  • Control failure Process breakdown
  • Remediation Correct root cause
  • Sampling Test selected records
  • Signoff Approval evidence
  • Exception log Tracked anomalies

Payroll Accounting AC

  • Payroll liability Amounts owed
  • Wage expense Labor cost
  • Tax expense Employer taxes
  • Employee deduction Liability until paid
  • Clearing account Temporary holding
  • Accrual Earned not paid
  • Reversal Undo accrual
  • Journal entry Debit/credit record
  • Bank recon Cash match
  • Off-cycle Separate payroll run

Common Traps

Contract label trap

  • Label is not status ≠ Control facts decide

Salary trap

  • Salary can be nonexempt ≠ Track actual hours

Bonus trap

  • Nondiscretionary affects OT ≠ Discretionary may not

Taxable fringe trap

  • Cash not required ≠ Value can tax

Deposit trap

  • Deposit differs filing ≠ Calendar both deadlines

Garnishment trap

  • Disposable not net ≠ Order priority matters

940/941 trap

  • 941 is quarterly ≠ 940 is FUTA annual

Control trap

  • Access is risk ≠ Evidence proves control

Last Minute

  • 1. Know seven FPC weights
  • 2. Classify before forms
  • 3. Control beats contract label
  • 4. Track nonexempt hours
  • 5. Include nondiscretionary bonuses
  • 6. Separate pre-tax rules
  • 7. Prioritize garnishment orders
  • 8. Calendar deposits and filings
  • 9. Reconcile W-2 to 941
  • 10. Document control evidence
  • 11. Research official guidance first

FPC Fundamental Payroll Certification

  • Practice Questions 200 questions Study Guide 30 topics Cheat Sheet 116 facts Flashcards 50 cards Videos 1 video Blogs 1 blog Free CE