Almost all employees cannot wait until the payroll day. It means that they will be soon receiving the payment for their hard work. However, if you are the one who is assigned to prepare the payroll of the employees, it can sometimes result in a major headache because you will need to perform a number of delicate tasks to ensure that all employees receive accurate and timely paychecks, not to mention the payroll taxes. Without sufficient time to prepare the employee payroll, it will often lead to the inaccurate calculation of paychecks and erroneous payroll taxes.
Basic Tips in Proper Payroll Preparation
Payroll preparation is always considered to be one of the most important tasks in running a company. And since your employees are considered to be the backbone of your business, it is always crucial to ensure that they are able to receive their pay without any errors and delays. Here are some easy tips that you can use when preparing and processing the payroll.
1. Always Prepare Ahead of Time
Experts recommend creating and using a payroll schedule as it lets you have enough time to prepare and process the payroll well-ahead of time. If there are any errors on the payroll, you will be able to make and address certain changes before the employee salaries are released.
2. Correct Payroll Calculation
If you want to get the exact monthly wage of the employee, multiply his base pay to the total number of hours worked in a given period of time. Since we are now living in a world of modern technology, most companies use payroll software to do the payroll calculations for them.
3. Compute the State and Federal Deduction
It is always crucial to calculate the state and federal deductions for each employee and subtract them from their wages. However, the calculation of the state income tax is different in each state as they have their own specific income tax rates. Deduct the employee withholding amounts and contributions (health insurances/retirement funds) from the employee’s gross pay. Make sure that these deductions are accurate and should reflect in their paychecks.
4. Print paycheck
After you have calculated the net pay for each employee, print copies of the pay stub and distribute them to the employees. Create a direct deposit file and make sure to forward to the bank. To ensure that the bank has received your deposit, call them and verify the amount.
5. Print Payroll Registers
A payroll register is a confidential document that shows the gross-to-net salary of an employee. Make sure to keep in a safe storage area for at least three years.
Oftentimes, payroll calculation involves a complex process. One wrong move and it can potentially result in a huge monetary loss. That is why many companies, small and large, are using payroll templates to make the task easier and more convenient. Make sure to also check out and download our payroll timesheet and payroll calendar templates before you leave. All these templates are great tools that can help prevent any potential errors on employee paychecks, as well as it helps you met all statutory compliance.