These can add up quickly and result in thousands lost annually due to payroll errors. Taking the time to make sure all employee information is accurate can quite literally pay off. Employees are also responsible for time cards or timesheets to ensure proper compensation at the end of each pay period. That would mean that these documents must be accurate, approved, and submitted on a timely basis; otherwise, it would be incredibly difficult for you to compensate an employee accordingly. It’s one of the main reasons why records must be in a clear and complete state for successful processing. The UKG ProPay Payroll Processing
Checklist provides a list of specific actions to complete to ensure smooth and successful
payroll processing.
Don’t forget to include any company-matched contributions to healthcare or retirement accounts in your calculations. Confirmed employee details have to be updated in the current payroll process in case of salary changes or other benefits because of confirmation. Your organization’s pay schedule (bi-weekly, weekly, monthly, semi-monthly) determines the number of pay periods. Subtract all of the above deductions from the employee’s gross pay to arrive at their net pay. Calculate the Social Security tax at a rate of 6.2% of the employee’s gross pay, up to a certain annual limit.
Such documents will provide each employee’s personal information, Social Security number, and tax filing status. If your payroll includes employee health insurance or retirement savings, you’ll need documentation showing the employee has approved additional deductions. If you find discrepancies between recorded information and accurate information, update your files and/or let your payroll service provider know of any changes. If you’re feeling queasy after reading through these steps, we’ve got you covered.
Again, because this is so vital to every step of the Year-End process, double-check that all information is correct on file, including SSN and FEIN. It’s important to note that the number of pay weeks per year is typically consistent for bi-weekly or weekly paychecks. However, in specific years, like 2021, there may be 27 bi-weekly pay periods, which affects annual leave balances accrued for the year and other Year-End calculations. Additionally, this time presents an excellent opportunity for employees to elect to receive their annual forms online, which is available by accessing employee self-service. Verify employee information from Form W-2 (SSN, correct name, address). Year-End allows employees to access their employee portal to review and submit any corrections to their address to ensure they receive their W2s/1099s at the correct address.
- Before you can process payroll, you’ll first need to get your ducks in a row when it comes to identification numbers, forms, scheduling, and more.
- From electronic signatures to tax documents, BambooHR keeps employee data organized and secure.
- In addition to each W-2, you will send a W-3 form; this form is needed for each employee and is a summary of the information on the W-2.
- These forms provide details on the amount of taxes paid and withheld during the reporting period.
- Actions include specific tasks, notes, and navigation that may apply to your processing procedures.
As you browse this detailed payroll checklist, you’ll learn about one-time steps to set up your payroll initially. You’ll also find out how to collect employees’ income and tax information, and use this data to calculate paycheck amounts. Then, we’ll guide you through actually paying your employees once you know what you owe. Before you approve the payroll, it’s vital for business owners to review all calculations and steps meticulously. This ensures the accuracy of payroll records, even if you’re using a payroll service provider.
Payroll Procedures
Before starting the new payroll, locking the previous month’s payroll will ensure that there are no errors or disturbances while payroll processing for the current month is in process. The IRS recently issued a final regulation amendment that has significant implications for ACA reporting. This means that businesses will only be allowed to file a maximum of 10 paper forms, taking into account all their required information returns. It is important to note that this limit is not cumulative, but rather applies to the total number of paper forms that can be filed. But the joy of print is best left to hand-written cards or limited edition books — not your payroll process. Account books, ledgers, and dusty, complicated records are a thing of the past thanks to automated payroll technology, and our lives are so much easier for it.
Step 2: Review Time Sheets for Discrepancies
Year-end payroll is a process that businesses must contribute to all year, including payroll reporting and tax filing in the year’s fourth quarter. If you’re looking for a simple guide to walk you through your annual payroll responsibilities, we’ve got you covered. Review your taxes and deductions for reasonableness and accuracy—for example, if your employee is living in Massachusetts, make sure they’re not being taxed in California.
Step 3: Set up your payroll system
So far, using Manual Payroll is the only way I’ve found that could work, but I’m open to other suggestions if there is a better way. Throughout her career, Heather has worked to help hundreds of small business owners in managing many aspects of their business, from bookkeeping to accounting to HR. Before joining Fit Small Business, Heather was the Payroll/HRS Manager for a top cloud accounting firm in the industry. Her experience has allowed her to learn first hand what the payroll needs are for small business owners. Invest time upfront to build a customized control framework matching your payroll complexity and risks. But don’t take a quick shortcut as that can lead to easy exploitation of poorly set up controls.
Now that the payroll payments are on their way to employees, it’s time to update your payroll records. Those records must show you withheld all necessary taxes and deductions. Once you approve all your employee time cards, you’re ready to run payroll and issue payments.
Example Payroll Processing Checklist
You will need to pay your federal unemployment tax (FUTA) from the fourth quarter with Form 940. You must also file federal income taxes and FICA (Social Security and Medicare taxes) through Form 941. The last form (Form 944) is an annual return of all paid payroll taxes. Whether you’re sending paper checks or direct deposits to your employees, don’t forget to review employee pay instructions and disburse payment. You’ve now neared the end of the process, and your employees are getting ready to do their payday happy dance. Once you have everything in check, you can begin issuing your payroll checks or processing your direct deposits just in time for the salary release.
But with a checklist, you can process payment confidently to meet the demands of the state, industry, and the company’s workforce. Regular payroll audits, both internal https://adprun.net/ and external, are crucial to ensuring your payroll controls are effective. Internally, you or a trusted payroll manager should regularly audit your payroll records.
Intuit does not endorse or approve these products and services, or the opinions of these corporations or organizations or individuals. Intuit accepts no payroll processing checklist responsibility for the accuracy, legality, or content on these sites. Once this is in place, you’re ready to start collecting employee information.
Keep accurate records of all taxes and withholdings that have been deducted from each employee’s pay, and report them to the appropriate tax agencies as required. Use the employee’s W-4 form and the IRS tax tables to calculate the amount of federal income tax to withhold from the employee’s pay. Overtime pay is calculated based on the hours an employee works beyond their normal workweek or workday.
Moreover, payroll deductions for things like health benefits or retirement contributions need to be meticulously managed to ensure compliance with tax laws. First, you need to determine the gross wage amount for each employee, then calculate and subtract various withholdings, such as income taxes. You’ll then determine the net pay amount, pay your employees, and make tax deposits to the relevant tax agencies on time to comply with tax regulations. Year-end payroll includes processing the last payroll run of the year, calculating your business’s payroll taxes, and completing the year’s payroll reporting. Year-end payroll processing is completed during the final financial quarter of the year and extends to the first quarter of the following year.