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Being a business owner can be rewarding. You can set up a great team and follow a vision, but running payroll can be a hassle. You have to make sure the numbers are correct, and if there’s a problem, it makes the workers unhappy, and there are legal issues. That’s why a thorough payroll checklist is so important. It can help to make sure there are no issues, and you stay organized.
Payroll is an area that requires accuracy, and many business owners tend to ignore it because they focus on business operations and interacting with customers, which is understandable, but it’s not a good approach. You need a good plan to identify errors. This guide helps you verify all of the steps and fulfill the promises you’ve made to the team and employees who are helping you run the business.
Why You Absolutely Need a Checklist
Paying employees has to be repeatable and routine. You have to do it the same way each and every time. If you want to save time and make the process easier on yourself, you need a solid system. This can eliminate a lot of the mistakes that you have to deal with yourself and your employees.
If you have a payroll processed checklist, it can help to eliminate the mistakes and stressful feelings that you have on payday. A good process can really save you time and money when you are running payroll.
Building a solid routine pays off come tax season. It’s common for people to miss payroll mistakes, especially when it’s a big check months down the line. Catching such mistakes months later is incredibly difficult, time-consuming, and costly.
Addressing issues today helps you avoid problems down the line. You won’t have to spend time organizing documents, and you can dedicate your time and energy to expanding your business.
Organize Your Information First
Before opening your computer, make sure all of your notes are organized. You cannot check work if you do not have a complete set of information to refer to. Getting raw numbers is essential to the process. In order to complete this step successfully, you must have accurate information regarding the total hours your workers have completed this month.
Verify the attendance and sign-in sheets. Verify against the list of employees. They may have clocked out on a lunch break and forgotten to record their work. If you see a clear time gap, you should clarify it with the employee. You cannot properly estimate the hours worked if you lack this information.
You should be mindful of the composition of your team. Have there been changes? Are there any new hires? Existing employees? If there is a shift in personnel, you need to collect the new employee’s tax documentation. You may have to do it fast. If you organize the documentation, you save time and greatly enhance your work.
Actionable Checklist
It is time to look through your checklist items for the payroll. Keeping all the most common mistake checklist items should be of utmost importance to you. Pay close attention to it and take your time.
- Verify Names and SSNs: Names should have correct spelling, and their SSNs must be correct to ensure that the government can properly document taxes.
- Review Pay Increases: Did you give somebody a raise? Did they receive a bonus? Did the new pay reflect in the system? It is very easy to forget a conversation you had weeks ago.
- Check Overtime: Working over the hours agreed upon in the contract can result in the employee earning more for each hour worked. Check that the math for the additional hours worked is correct.
- Check Insurance / Savings: Some employees pay for their health insurance. Others choose to include their contributions to a retirement plan. These numbers change every year. Make sure they reflect the changes.
- Watch the Total: Track the amount of money in the bank. Track the amount the employees receive. Research the reason for the discrepancy if taxes look too high or too low.
- Check Leave: Has anyone taken a vacation? Subtract vacation days from their balance. This keeps your records neat, so people cannot take too much time off.
Irregular Wages and Reimbursements
Sometimes you pay for more than hours worked. You may pay a bonus for good work. You may pay a fee for a sale. These payments are classed differently. The government usually taxes these types of payments at a higher rate. Make sure to choose the correct class in your software.
Sometimes employees may have to spend their own money while working. They may have to purchase materials or pay for fuel. There is an obligation to refund them for these expenses. This is known as a reimbursement.
This is typically not subject to taxation. It must be considered separately from employee wages. They may need to see a breakdown of this, and for that, you may use a paystub generator. It creates a professional document for your employees, detailing how their money is distributed.
Advice for Small Businesses
Every small team is a family. You know your employees personally. If you make a mistake, it’s very personal. Delayed employee wages can make team members struggle to put food on the table. Giving payroll schedules for small business owners keeps the trust alive. Your employees know they can rely on you.
Small businesses can face increased scrutiny from the government. Things like large offices with lots of accountants aren’t a factor here. Being meticulous now pays off in the long run. Even if there are only a couple of you, the rules are the same. You still have to withhold the appropriate amounts of taxes. You must pay those taxes to the government, and on time. Follow these common expense management strategies to stay organized.
The Final Look
Put all your information into the system and step back for a minute. Get a snack, or take a walk, or do something else. Coming back with a little time lost will help you see all the little mistakes and typos that you missed previously. A tiny mistake could have massive consequences, especially with checking.
Compare this month to the previous month. Do the totals appear to be significantly higher? If you did not bring any new employees on, try to figure out the cause. This is a fast way to identify big mistakes. Look for names listed twice by accident. Review any employees who might no longer be there.
Watch Out for Direct Deposit
Numerous employees receive payments through their banking institutions. Confirm the bank account numbers one last time. New employees must be extra careful with this. A single incorrect digit can result in payments not being sent. Fixing the issue can take several days. Your employee may be left without funds.
As large holidays come up, note in advance that banks will close. It can impact payroll deadlines and will also require advanced payroll submissions. Write these reminders in January so there are no surprises later in the year’s celebrations.
Save the Records
Make sure to save the notes, as you’re legally required to store them. Your bank files must be legally stored, so make sure to keep a second copy elsewhere, and keep the files stored digitally under password protection as well.
Payroll discussions are important to build a strong team, so timely payment of pay stubs plays an important role. Open discussions about payroll are critical to avoid misunderstandings and miscalculations in earnings.
Conclusion
There’s no reason for payroll to be intimidating. Just take it step by step. Your payroll processing checklist lets you keep your focus. It’s all about staying calm and collected. Getting it done right today means no big problems tomorrow. Running payroll and being detail-oriented gives employees the respect they deserve.
