How to streamline payroll: Checklist + template Karbon resources

Conduct audits at least annually or more frequently if required by your industry or local regulations. By conducting regular audits, you can identify and correct any errors or inconsistencies in your payroll process before they become problematic. Lastly, if you plan to offer direct deposit, now is the time to get employee consent and collect their banking information. It’s part of operating your business legally—according to state laws and the Fair Labor Standards Act (FLSA). In payroll and accounting, being able to “tie out” as you go is very important. Have a process in place to ensure that balance sheet statements are correct, and everything matches throughout the entire process.

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• You’ll also need to consider federal income tax withholding and, depending on the state, state payroll taxes.
• Any errors in the system can harm the organization’s performance and satisfaction levels.
• Again, this is crucial for ensuring the sustainability and competitiveness of your business in the long run.
• By following these steps, you not only comply with legal requirements but also contribute to better business days through effective payroll management.
• Paying for payroll software and payroll processing is expensive, but it also ensures that you are offering the greatest benefit to your employees properly and on time.
• There’s a lot to consider and review when it comes to payroll processing, and you don’t have to do it alone.

Many organizations choose to outsource their payroll entirely to PEOs, but some small businesses often have to go the DIY route. And it all starts with a robust accounting practice management tool like Karbon. With Karbon, you can use workflow templates in the same system you use for email, internal communications, documents, client management tools, time tracking, billing and payments, and reporting. Depending on your client’s region, paying the appropriate payroll taxes, social security taxes and other tax payments may happen at the point of paying the employees.

Also, remember to account for any special events like sick leaves, holidays, etc. Noncompliance with tax laws can lead to penalties and hefty fines. Payroll software like Paystubsnow can help you stay compliant by providing automated tax calculations and updates on tax law changes. Maintaining accurate records and conducting regular audits is not just a legal requirement; it’s also a smart way to manage payroll effectively and stay compliant.

Before you print checks, do a final review of all changes.

And, if applicable, deduct wage garnishments for child support, tax levies, or creditor judgments. Finally, make sure your business has an Employer Identification Number (EIN). You will need this for reporting and filing federal taxes on behalf of your employees. First things first, let’s quickly touch on why payroll management is so important for your business. On the one hand, a payroll service does cost money, and any money saved may be reinvested in your company or utilized for other critical activities. Check if the minimum hours worked quota was completed- Every company has a percentage for a minimum amount of hours worked to be eligible to receive the full salary.

This includes calculating and withholding taxes, correctly classifying your employees, maintaining accurate records and filing all tax forms on time. That way, you can keep everything above board and avoid any costly fines and penalties. Payroll processing may be a complex undertaking, which is why many businesses utilize payroll software and outsource payroll processing to a payroll provider. With a payroll policy, employee info, and a direct deposit in place, it’s time to track hours. The FLSA requires employers to maintain accurate records of work hours for all nonexempt employees.

• By conducting regular audits, you can identify and correct any errors or inconsistencies in your payroll process before they become problematic.
• One of the most procedure-bound and demanding processes is payroll.
• Most importantly, choose software that is easy to use, fits your budget, and suits your needs as your business grows.
• Most employees live paycheck-to-paycheck, so unexpected disruptions to a payroll schedule can be disastrous.
• A payroll checklist is one of the best tools to use to manage payroll processing better.
• Processing payroll may take several hours, depending on your number of employees and the tools you use.
• Once all these are accounted for, you arrive at the net pay, which is what each employee takes home.

Payroll Checklist: The Bottom Line

The next step is using this information to calculate an employee’s wages. Salaried employees receive a fixed annual amount divided by pay periods, while hourly employees are paid based on the number of hours that they have worked. This includes hours worked per day, clocking in and out times, breaks, overtime, and paid wages. Failure to comply with these FLSA time-tracking legal requirements can payroll processing checklist lead to fines and penalties. The next pre-payroll activity in our payroll checklist is classifying the status of each employee.

Step 3: Calculate Net Pay

While the checklist will vary depending on the company’s payroll system, this article will walk you through the typical payroll process. Payroll is often cited as one of the most complicated aspects of running a small business. You need to calculate due amounts for each employee, including withholdings and deductions, stay compliant with federal and state regulations, and file all necessary tax forms correctly and on time. Because of these complexities, most employers rely on a payroll checklist to make sure nothing is overlooked.

Automated payroll and time-tracking tools can reduce the time to process payroll. One reason is that most payroll processing solutions calculate payroll taxes for you, which could take a while if done by hand. At Genesis, we can partner with you to ease the burden of payroll processing. You track the hours and we’ll do the rest—from payroll processing to tax filing to benefits administration.

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Projects, splitting time across departments, and allocating time for employees with multiple jobs within a company can all affect how you process payroll. Review your taxes and deductions for reasonableness and accuracy—for example, if your employee is living in Massachusetts, make sure they’re not being taxed in California. An Event Photography Contract is a form template designed to outline an agreement between a photographer and a client for providing photography services at an event. Determine whether any changes to an employee’s current record are necessary. For example, employees promoted or transferred to a new role may receive additional benefits or a pay range that differs from their former job status. Remember to avoid ignoring any wage increases that employees anticipate seeing on their payslips.

On a state level, you’ll also need a new-hire reporting account and a workers’ compensation account (though the latter may vary by state). Direct deposit is often the most popular, but paper checks, cash, and mobile wallets are also options. Alongside issuing payroll checks, you’ll also need to generate and distribute pay stubs to provide employees with a breakdown of their earnings and deductions. If there have been terminations, you need to factor in all the benefits that need to be paid out.

Payroll management is something you may perform on your own or outsource to a professional. The minimum need is knowledge of payroll administration and familiarity with the different rules and taxes that apply. Payroll consists of various steps, which you may miss without a checklist.

Now that the payroll payments are on their way to employees, it’s time to update your payroll records. Those records must show you withheld all necessary taxes and deductions. From data gathering and input to reporting and automating, this template outlines the essentials for every step in your payroll process. Download and create as a template in Karbon to assist with providing outsourced payroll services using Gusto. Therefore, you need a payroll processing checklist to avoid making mistakes in this process. Payroll preparation has many moving parts, but breaking it down into clear steps can help.