What are the Steps in Processing a Basic Payroll?


For employees to be paid, most employers must perform payroll processing. Although payroll processing can be an extremely detailed task, the steps generally remain the same. It takes good concentration and mathematical skills--plus solid organizational abilities--to effectively and accurately process a payroll.

Hourly Pay

  • The first step in payroll processing is to calculate the wages to pay each employee. The most frequent pay cycles are weekly, biweekly, semi-monthly and monthly. Hourly employees are usually paid weekly or biweekly. Most companies will have hourly employees complete a time sheet to be turned in at the end of each week. The payroll professional must ensure the employee and her manager/supervisor signs the time sheet; if not, it is invalid. Typically, regular, personal/sick or vacation hours are recorded on the time sheet and are paid at regular pay. Overtime pay should be listed on the time sheet as well to be paid at time and a half.

Salaried Pay

  • Salaried employees are usually paid biweekly, semi-monthly or monthly. They are not required to complete a time sheet for they are paid the same amount of hours each pay date. The only time a salaried employee's hours will change is if she had a salary change or is to be paid on a prorated basis (this could be due to termination or other unpaid days). Typically, the payroll professional does not need to make any changes to a salaried employee's pay, as the system automatically pays the amount due.


  • Employees may opt to participate in the company's health insurance, 401k or cafeteria plans. These amounts are usually deducted from the have to be changed unless the employee is making a change to his deductions. In this case, he should notify the payroll professional in writing of the change. If the changes are submitted timely, they are made effective on the next payroll.


  • By law, the employee and the employer are both required to pay payroll taxes; the employee and the employer must pay federal and usually state taxes; some states require county taxes be paid as well. Some companies use payroll software that will compute these taxes, automatically deducting the amounts from the employees' paychecks. The payroll professional is also responsible for depositing taxes to the government, for filing quarterly and annual taxes, and for issuing yearly W2s to employees.

Payroll Adjustments

  • Once the hours to be paid are entered in the system, the payroll professional must double-check the information. She can run reports from the system and use them to check for errors. Any errors detected before the payroll closes can be corrected and reflected on the current payroll. Once the payroll is closed, changes or adjustments can be manually done (e.g. a manual check) or adjusted on the next payroll.


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