Payment checks are done for a variety of reasons. You might need to pay a vendor for goods, pay someone who has done a service for you or pay an employee who has been working for you. Preparing the payment checks in each of these situations is important so that you can keep good records. Minneapolis CPA Chuck Johnson outlines a procedure for payment checks.
Vendor Payment Checks
Prepare vendor payment checks according to the contract you have with the vendor. You might be paying the vendor per item provided, or you might be paying them at monthly rate to provide you with items.
Write down how many items the vendor has provided if you are paying them by item. Write down the amount you are paying per item. This might require several columns as different items might cost you different amounts of money. Multiply the number of items the vendor has provided by the amount you are paying per item. Add the columns together if you have more than one column. Write the check for that amount.
Keep track of the number of weeks that the vendor has provided supplies if you are paying per week. Write the check for that amount.
Service Payment Checks
Create a contract for services that states the amount of money you are going to pay depending on the services provided. Look over the contract in preparation for the payment checks. Write the check out for the amount.
Employee Payment Checks
Multiply the number of hours an employee has worked by the amount you are paying them per hour. This is the gross pay for that employee. Consult your tax representative or tax information for the amount of money or percentage of payment you are withholding from each check. Calculate that amount and minus it from the total. All employees should have Social Security taken out of their checks, unless there is a specific reason not to do this. Minus that amount or percentage. Minus any other amount for insurance, taxes or other withholding amounts such as alimony, child support, or student loan payments. Find a final total for that payment. Write out the weekly or bi-weekly payment check in that amount.
Write out the payment checks and deliver to the employee, vendor or service provider. Record the check in your checkbook or accounting ledger for future reference.