Payroll Processing Checklist
|SET-UP, POLICIES, AND PROCEDURES||Collect Employee Information||Determine which employees are salaried and which are hourly.|
Properly classify your workers as full-time employees, independent contractors, or interns.
Tipped employees have other requirements.
|Select a Payroll Software.|
|Procedures to be Implemented||The recording of hourly employees’ time, such as time clock or payroll software.|
|Cutting checks and direct deposit|
|Administrators||Determine who has access to make schedule changes and changes to pay rates.|
|Setup Pay Calendars||Ensure all pay frequencies and earning schedules are scheduled.|
|Create Policies For Specific Scenarios||
· for sick days, holidays, maternity leave, vacation pay, and other absences;
· new hires
· pay changes and terminations;
· overtime and bonuses
|Determine if You Need State or Local IDs.||Some state and local governments require businesses to obtain ID numbers for processing taxes.|
|KNOW FEDERAL AND STATE PAYROLL LAWS||The employer must comply with the U.S. Department of Labor’s wage and hour standards and the IRS payroll tax regulations.||The FSLA says that all employee payroll records must be kept for three years after the date of the last entry.|
|The IRS requires that employee records be kept on file for four years.|
|The Family and Medical Leave Act (FMLA) requires employers with over 50 employees to keep records regarding any employee leave under FMLA.|
State unemployment agencies require that employment records be kept for between four to seven years.
Check for state law specifics.
|Create a detailed checklist with the specific wage processing tasks for each pay period.||Include the steps required to process wages from beginning to end.|
|Confirm time card submissions.|
|Compute time cards and enter payroll hours into the system.||Ensure salaried workers receive regular pay for the pay period.|
|WAGE PROCESSING||Enter any changes to employee payroll data.||This includes changes to employee address, deductions changes, pay adjustments (such as raises), and new hire and termination processing.|
|May also include processing supplemental pay, such as overtime, severance, bonuses and commissions.|
|DEDUCTION PROCESSING||Statutory and Involuntary Deductions||
This includes federal income tax, Social Security tax, and Medicare tax.
May also include state income tax.
Includes wage garnishments and child support withholding orders.
|The employer must withhold these taxes from employees’ paychecks, as well as for its portion of payroll taxes.|
|Voluntary Deductions||These are offered by the company like retirement and health benefits, life and disability insurance, and charitable contributions.|
|PAY GENERATION||Print Paychecks and Pay Stubs and Make Direct Deposits.||Include a pre-processing report to double-check and (if required) correct payroll before printing paychecks|
|Make a Direct Deposit File.||Note delivery of paychecks to a specific person after payroll processing (if designated).|
|POST-PROCESSING||File all relevant data for compliance with record-keeping requirements.||Include data for various required payroll reports|
|Generate internal reports||Those used for Accounting, Finance, Management, and Human Resources|
|Generate reports for CPA, legal counsel, or other outside consultants|