Processing payroll can be taxing especially when you rely on yourself to do so. However, it is something that needs to be done accurately and properly so that you won’t put your business at risk. Running payroll is also a detailed-oriented process which means it can be time-consuming and time difficult. Hence, some business owners prefer using payroll software to handle the task. With the help of the right software, it is possible to streamline the payroll process seamlessly and efficiently. Some business owners also prefer to hire professional payroll processing service to do the task. Regardless, it is important that you understand all the steps involved in the process.
General payroll processing checklists you must know
Keep in mind that each company may have different variables specifically which affect how payroll is processed. Below is general payroll processing checklist you must know as you run your own business:
- Employer identification number or called EIN is necessary in order to identify your company for tax purposes.
- Tax identification numbers or state and local for taxation and recordkeeping.
- Tax information of your employees which include all full-timers and part-timers, contract and freelance employees.
- Wage or salary information of your employees
- Direct deposit information of your employees if applicable
- Federal and state withholding accounts
- Payroll budget account
- Payroll schedule
- Paper checks or direct deposit service
- Tax payment schedule
Those are important information you need to get to process payroll properly. In addition, you need to pay attention on certain things while processing payrolls such as make sure that financial records are complete, detailed, and organized. It is just as important to pay federal and state taxes on time to avoid unnecessary problems.
Processing payroll more effectively
Processing payroll more effectively will be beneficial for your business in the long run. With the right strategies, it is possible for you to do it seamlessly. Make sure that you don’t miss any necessary steps of payroll processing, such as:
Review employee information
It is possible that there is new or changed information regrading to your employee. Hence, reviewing the information before processing payroll will help prevent unnecessary error.
Review gross pay
It is important to calculate your gross pay in which you calculate thoroughly how much money each of your employee will receive before withholding. Know the period of payrolls in which you pay your employees be it weekly, biweekly, monthly, etc.
Review net pay
Your net pay should be reviewed as well before processing payroll. Calculate how much money that must be deducted from each employee’s pay for taxes and withholding.
Do a final review
Review everything in the end to make sure that all the data is correct and there is no mistakes to make.
Payroll report should be informed to the stakeholders since it is significant budget item of your business and they have to know about it. Make payments on time through direct deposit payment or paper checks. Then, make sure to distribute employees’ withholding accordingly into the proper account for various payments.