How to Run a Payroll Checklist

Accurate and timely salary payments are key characteristics of a reputable organization. It can be made possible through the payroll process but managing it can be overwhelming.

A payroll checklist can provide you with an easier and more convenient way of processing a payroll. With Salary.com's Data as a Service API, you will be given real-time salary data in accordance with state regulations and transparent pay structures to help you run the payroll checklist smoother than ever.

What is a payroll checklist?

A payroll checklist is a detailed guide that outlines the steps and deadlines involved in processing payroll for employees. It extends to calculating gross pay, deducting taxes such as federal income tax and medicare tax, and accurate record-keeping of employee earnings.

Each organization may customize its checklist to fit its specific needs and comply with state and local tax laws. This ensures that all employee payments, from net pay to retirement contributions, are accurately processed and documented.

Salary.com's Data as a Service API integrates the leading HR-reported compensation data so you can quickly determine how salaries are changing and effectively run your payroll checklist.

What are the five basic steps of payroll?

Managing payroll is crucial for any organization to ensure employees are compensated accurately and tax obligations are met. Here are the five basic steps of payroll processing:

1. Gather employee information: Collect employee details including wages, hours worked, and benefits eligibility.

2. Calculate gross pay: Determine total earnings for each employee based on hourly rates or salary. To ensure that employees that employees are paid fairly, organizations can take advantage of Benchmark Pay Data to gain access to a living database that continuously blends data from multiple sources to create a complete and current market price for any job.

3. Deduct taxes and contributions: Subtract federal, state, and local taxes, along with social security and medicare taxes.

4. Process payments: Prepare paychecks or organize direct deposits for salaried employees on each employee's pay period.

5. Maintain records and reporting: Keep accurate records of payroll transactions and generate necessary tax forms.

What should be included in a payroll checklist?

A payroll checklist ensures that all necessary steps in the payroll process are completed accurately and on time. Here's a list of components in a payroll checklist:

Employee information verification

Verify employee details such as names, addresses, and tax withholding information for accuracy.

Payroll schedule adherence

Ensure adherence to the established pay period to ensure timely payment to employees.

Tax form preparation and filing

Prepare and file necessary tax forms such as W-2s, W-4s, and local tax forms to comply with tax authorities.

Benefits and deductions calculation

Deduct employee benefits, retirement employee contributions, and tax withholdings accurately.

Payroll records maintenance

Maintain organized payroll records including pay stubs, tax filings, and employee compensation details.

Compliance with legal requirements

Ensure compliance with payroll tax laws like state income tax to avoid penalties and legal consequences.

Payroll checklist template

Here is a sample template of a payroll checklist:

The payroll checklist template above outlines the specific and detailed steps required to calculate the total net pay for each employee based on their pay period. It also requires information such as the specific amount of money from calculations, the date of completion, and comments on each step's result.

Having a payroll checklist template ensures that every necessary step is not overlooked. This tool helps your business maintain compliance with state regulations, accurately compensate employees, and efficiently organize payroll documentation.

What is the purpose of the payroll checklist?

The purpose of a payroll checklist is to ensure employees receive their pay accurately and on time. Timely payroll processing is important to promote employees' financial stability as 78% have reported experiencing difficulties paying bills when paychecks are delayed.

Benefits of a payroll checklist

Organizations that utilize a payroll checklist can expect the following benefits:

Streamlined payroll processes

It helps you stay organized to easier manage payroll software, payroll provider, and the entire payroll system until it is finished.

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Accurate tax payments

Ensures all payroll taxes, including social security tax, payroll tax forms, and taxes withheld, are correctly calculated and paid on time.

Compliance with government agencies

Helps you stay compliant with the Internal Revenue Service (IRS), Social Security Administration (SSA), and other government agencies to avoid penalties and fines.

Efficient data management

Ensures all payroll information is up-to-date and accurate by keeping track of payroll data, employee records, employee files, and payroll reports.

Improved employee satisfaction

This leads to happier and more satisfied employees as employees' wages, health insurance premiums, retirement plan contributions, and paychecks are paid accurately and on time.

With Compensation Data, you can enhance your organization's compensation strategy with salary data sets that HR and team managers can use to pay your staff right.

Common mistakes to avoid in a payroll checklist

Having an accurate payroll checklist is crucial for running a smooth payroll process. Avoiding these common mistakes can save you time and ensure that your employees are paid correctly:

• Incorrectly calculating taxes

  Use payroll software to accurately calculate taxes paid and avoid tax liabilities for salaried and hourly employees.

• Missing filing deadlines

  Keep track of every filing deadline to avoid penalties for late payroll taxes and ensure timely tax payments.

• Ignoring time and attendance records

  Track time for attendance to ensure overtime hours and paid time off are correctly calculated for hourly employees and full-time employees.

How to run a payroll checklist

You can streamline your payroll process by following these 7 simple steps on how to run a payroll checklist:

1. Step 1: Create a detailed payroll checklist

   Create a detailed payroll checklist that outlines each step of processing payroll. Make sure to consider any specific requirements or regulations that apply to your industry or location. This checklist will serve as a guide to ensure that payroll is processed accurately and in compliance with all laws and regulations.

2. Step 2: Educate team on checklist usage

   Educate staff on how their payrolls are calculated and clearly explain the details of earnings and deductions. This is to ensure transparency and promote trust among the team.

3. Step 3: Process payroll using the checklist

   Follow the checklist you made to process payroll. Be proactive by making sure that all calculations are done before the payment period to pay employees on time. This guarantees accurate and timely payments to employees that align with organizational values.

4. Step 4: Review deductions and contributions

   Recheck deductions in payroll records, comply with legal requirements, and make necessary adjustments. This is to ensure accuracy, maintain fairness, and prevent errors in payrolls as much as possible.

5. Step 5: Pay employees taxes and contributions

   Submit employee taxes like federal state withholdings and contributions like Medicare. Use your employer identification number (EIN) to report and remit it to the government on behalf of your employees. This is to avoid penalties and maintain compliance with tax laws to ensure financial stability for your business.

6. Step 6: Recheck employee info for payment

   Verify employee information, their employment status, and payment details carefully. Pay employees' wages based on the result guided by your checklist. This ensures accurate payroll processing and reliable employee payment that could boost their overall job satisfaction.

   With Detailed Pricing Reports, you can run reports on any job and deliver a comprehensive view of the compensation for a specific job.

7. Step 7: Keep records of payroll

   Maintain detailed records of each payroll cycle like pay stubs. Securely store these records to ensure accurate financial documentation, support regulatory compliance, and improve accountability within the organization.

   Accurately paying employees during pay periods is important for promoting employee satisfaction. Employers can achieve this by using a payroll checklist to prevent processing payroll errors. Salary.com's Data as a Service API can help you run a payroll checklist and easily manage employees' paychecks as it integrates with the top HR-reported compensation data.