Time Keeping & Payroll Procedures

When employees work they expect to be paid for services performed. Most employers are aware of the importance of paying their employees timely and accurately. Therefore, they hire payroll personnel to handle payroll processing. Besides accuracy and timeliness, there are several other factors involved in the payroll process.

Hourly Employees

Hourly employees are paid based on hours worked during the current pay period. In less frequent situations, adjustments for different pay periods can be made in the current pay cycle. Most pay cycles occur weekly or biweekly. Some companies pay on a semi-monthly basis, while others pay monthly. This depends on the employer. Regardless of the pay cycle, hourly employees are usually required to report hours worked on a timecard.
Many companies use paper timesheets, which the employee uses to record his regular hours, overtime hours, and vacation and sick hours taken during the current pay period. Some companies use an electronic timekeeping system, which the employee uses to clock in and out. The employee and the appropriate party (usually her manager or supervisor) must sign the timecard for it to be valid. Payroll personnel are highly advised to notify the appropriate person if the timecard is unsigned instead of simply paying it as is.

Salaried Employees

Salaried employees are paid a set wage every pay cycle. This amount is usually coded into the system. If the company uses payroll software to process its payroll, the payroll staff is not required to manually calculate hours worked for salaried employees. Normally, salaried employees do not have to complete timecards, as their pay remains the same, unless there is an adjustment in pay.

Employee Deductions

U.S. law regulates that all employees must pay taxes. Tax deductions are automatically deducted from employee paychecks. The payroll staff is responsible for recording and inputting all employee tax information into the payroll system. Employee tax deductions include federal, state, and depending on the state, local taxes. If the employee wishes to make changes to his federal or state taxes, he must complete a W-4 or a state withholding tax certificate. Employee deductions can also include voluntary deductions such as 401K, medical, dental, and cafeteria plans.

Employer Taxes

The employer is also required to pay taxes as well. Payroll personnel are responsible for ensuring that these taxes are submitted timely to the Internal Revenue Service and to the state's Department of Labor. Employer taxes include federal unemployment, social security, medicare and state unemployment taxes. The employer is also responsible for depositing all employee and employer taxes timely and issuing W2s annually to employees.

Other Payroll Tasks

Though payroll processing has been simplified with use of payroll software, the payroll professional still has a detailed job and must check all payroll data relating to payroll before closing payroll. Once the payroll is closed, any adjustments for the current payroll are usually made on the next payroll cycle. Depending on the circumstance (shortage in employee's paycheck), a manual check may be issued before the next payroll. The payroll staff must also answer any payroll-related questions from employees.

References

• Year 2009 Payroll Tax Changes
• Employee Timekeeping Procedures