Tips for Properly Preparing and Recording Payroll
Mar 27, 2020
Preparing and recording payroll is one of the most crucial tasks for an accounting department.
It directly impacts the livelihood of every one of the company’s employees. Therefore, everyone in the company scrutinizes payroll. These tasks vary from pulling employee time clock data, gathering information for direct deposits and withholdings and simply receiving payroll reports to make a journal entry. Through all of these, there are some crucial steps that should be followed for successful payroll and in order to avoid mistakes.
Here are some tips:
- Make a checklist! Bullet all your important tasks to ensure payroll runs smoothly such as confirming the payroll period, number of employees receiving pay, confirming if vacation or sick time is used, and forwarding reports to the payroll reviewer.
- If you are responsible for gathering information from your employees, make a new hire packet with critical paperwork including direct deposit form or bank letter referencing the direct deposit information, a voided check, W-4, I-9, proof of identification, etc.
- Request payroll information in a timely manner so processing is not rushed.
- Review the information and ask for clarification on anything that is confusing.
- Once you have recorded the payroll, run reports and send to the payroll reviewer for final approval. This will help to avoid mistakes. It is always great to have an extra set of eyes to review your work as well. Save these reports in a payroll processing folder to refer to if issues or questions arise.
- Make a step by step manual with screenshots that a colleague can follow in case an unexpected event keeps you from working or vacation takes you out of the office.
- With regard to termination, be sure you are complying with your state’s termination requirements. There are different requirements for employees willingly leaving vs. being terminated. It is important that you provide proper payment for final wages, unused vacation/sick time, etc. at the appropriate time. This link breaks down required documents according to state along with what needs to be included in the final paycheck to the employee.
- When dealing with terminating an employee, consider presenting the employee with a letter of termination even if it is not required by the state. This helps give closure to the employee’s time with the company as well as providing the company with additional documentation in case an issue arises later.
- If applicable, schedule an exit interview with the employee.
- The EEOC requires employers to keep employment reports for one year from the date of termination. Learn more here.
Lastly, leverage the customer service of the payroll company that you use. ADP, Advantage, Paychex, TriNet and more all have staff who are willing and eager to help. There is usually a representative that is designated to you for this purpose. You may need specific reports that you could not find with the payroll service’s software, but the representative may be able to get them to you in a timely manner.
Payroll is one of the most important aspects of a client’s company. Employees need to be paid! These tips will help you smoothly process payrolls.
Author: Kristen Celona | firstname.lastname@example.org
Outsourced Accounting Systems and Services