There are many specific steps that need to be set up for payroll processing. It begins when a new employee gets hired, and ends with that employee getting their full pay each pay period, then repeats most of the steps for each subsequent period of payroll processing. If you have been doing payroll processing for quite some time, or if you are new to the role, then it is good that you review the steps to make sure you do not forget anything.
Where to Begin Payroll Processing
To get started, you need a newly hired employee to fill out all his or her specific information. This is typically done by them filling in their health insurance information, plus their W-4 upon their hire. This lets you know what type of deductions should be included, so you can make sure the employee’s payroll processing goes smoothly. You also need to send copies to your payroll department for them to input into the system.
Next, you need to get the time card information that is specific to that employee. You need to know how many hours were worked by each employee, and the hourly wage that an employee receives so you can continue payroll processing. This could be given to you on a piece of paper that was filled out, a card that got punched, or even by a computer spreadsheet of when people scanned in and scanned back out.
From there, you need to ensure that the information about the hours is correct. This verification is an important part of payroll processing, as you do not want to under-pay or over-pay an employee. This usually involves you being in some type of communication with the supervisors of the employee who can verify that he or she worked the hours shown, and is often able to be done with very little effort on their part.
Payroll Processing Becomes a Bit More Complicated at This Point
Now, you must start crunching the numbers for payroll processing. You need to figure out the wages that the employee earned. This can be hourly, or it can be a specific percentage based on a salaried employee. You also need to make sure to include changes that should be involved in payroll processing, such as overtime wages, bonuses the employee earned, and specific changes that the employee needs. Items like exemptions, deductions, and income that needs to go elsewhere need to be calculated at this part of payroll processing.
Taxes come in next. You need to calculate taxes for the state of Texas, as well as the federal government, and make sure those wages are withheld accordingly. Once taxes are calculated, you also need to apply any garnishments, dues, pension payments, and voluntary deductions that you have for that employee. Any garnishments or loans need to be updated each time you do payroll processing, so you know how much is left on each payment, and when those payments should stop.
Some employees will want direct deposit, while others will want a manual check payment. When you are doing manual payroll processing, this amount needs to still be included in the formal register of all payroll payments. Creating that register is next in the steps of payroll processing. You need to create a summary of what wages and deductions were set aside for each employee on a ledger. This will be used for tax reports.
A verification step comes in next for payroll processing. You want to double-check that all wage amounts and withheld taxes are correct for each employee so that you are sure that your ledger is accurate, as well as the payments for each employee that you plan to make. Once that verification is completed, manual payroll processing will be done for those employees, while other information is input for those who want direct deposit. Once that is done, you can send out payments and notify recipients that their deposits were made.
Deposits for the Company Are Next in Payroll Processing
All wages that were withheld for taxes, garnishments, loans, or anything else must be deposited at the bank your company uses with authorization to accept these payments. This needs to all be documented carefully, as the payroll reports are created next. Keep in mind, the IRS has a very specific schedule for these deposits, so make sure to make each of them on time.
Payroll Processing is Best Left to The Pros If You Aren’t Sure
All businesses in or around Carrollton, Texas need to have payroll processing done. If you are not sure that you are following each step to the letter, then it is best that you have a company handle this aspect of your business. You don’t want to take any type of a chance that you are doing any part of your payroll processing the wrong way, as that could leave you facing a lot of fines and financial struggles.