How to Prepare Payroll

Payroll processing is a meticulous task. It involves a keen eye for detail so employees can be paid accurately and in a timely fashion. Preparing for the payroll is an essential process for any payroll manager to master, as preparation is key in ensuring a successful payroll run.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Tape calculator
• Payroll software

Payroll Preparation

1. Accumulate all the necessary timesheets and salary information for the upcoming payroll. Ensure all timesheet hours and dates are accurately computed. The timesheet must be signed by the employee and/or her manager/supervisor. For salaried employees, ensure all encoded salaries are still present in the system. If processing weekly, biweekly and semi-monthly payrolls, separate all data to be paid according to the respective pay dates--do not confuse them.

2. Check for adjustments submitted for benefits and tax purposes. Examples: 401k, medical, dental, cafeteria plans, dependent care, car allowances, expenses, vacation, sick and personal time, and increases or decreases in tax exemptions. Keep an eye out for child support and garnishment deductions as well. These changes must be entered before or while running the payroll, or the changes will not register.

3. Look for address changes submitted by the employee, as well as pay adjustments (retro pay) submitted by supervisors and managers. Retros should be calculated before opening the payroll with the amount to be paid already documented. Calculate retros by checking the effective date (a prior date outside the pay period) of the salary adjustment and multiplying the amount of days by the difference in pay.

4. Consult with the appropriate party about any noticeable errors or questions so the adjustment is made within the current payroll instead of after the payroll is closed. This is very important, as this can prevent voiding and reissuing checks, and quarterly (941) and yearly (W2) tax issues. Above all, this reduces the risk of employees becoming disgruntled over an erroneous paycheck.

5. Do not wait until it is time to run a payroll to perform a system check. A software can malfunction and there's nothing worse than a defective payroll system during payroll crunch time. Eliminate this by browsing different areas of the software to ensure that it's functional. If the payroll is manual, ensure that all paperwork is neatly organized and within reach during the payroll run.

References

• Payroll Assistant
• Basic Payroll Accounting for New Clerks