Payroll System Checklist

The payroll system process is an essential part of business operations. A well-designed and properly implemented payroll process can help you to manage your workforce, stay on top of all financial obligations and ensure compliance with tax laws. It can also help you to automate and streamline your business operations.

However, payroll management can be complex and a challenge for small businesses to implement. We’ll take a look at some of the key features of an effective payroll process, and provide a step-by-step guide checklist on how to set up a simple, yet comprehensive, payroll system process

Payroll system offers you a way to document and store everything you need about employee wages and tax. Employees can be paid either weekly, fortnightly or monthly so many difficult calculations may need to be done. 

Whether you are using a bookkeeper or accountant to run your payroll or will you be doing it in house? There are a number of essential details and processes you need to perform to make sure the employees have been paid and all relevant payments have been made to the government.

yroll or will you be doing it in house? Employees are usually paid either weekly, fortnightly or monthly. 

What is payroll?

Payroll is a term used to describe the process of calculating, collecting, and distributing employees’ wages. It is also called “payroll processing” or “payroll management.” 

Payroll is an integral part of every business. Many small businesses only have one employee, but some of the biggest companies in the world employ thousands of people. Payroll is a necessary component of running a business, regardless of size.

Calculating the amount of taxes you should withhold from your employee’s paychecks depends on the amount of income that they earn.

If your business is not paying its employees correctly, or paying what they owe in taxes to the government you are leaving yourself open to legal problems. If you do not know how to handle payroll, you may end up losing money instead of making it.

What details are required for payroll?

For every pay / wage period, employees are required to provide a detailed record of their gross pay, income tax, National Insurance Contributions (Medicare USA) and any other deductions like pensions or benefits like private health care. This generally comes in the form of a wage slip either in a paper form or digital wage slip which is emailed.

Payroll is a complex process and it is very easy to make human errors or forget an essential item with a documented process. 

What are the steps in the payroll process?

Payroll is the process of recording, categorising, and paying employees according to their salary and other allowances. It is an essential part of business operations and payroll is considered the backbone of any business.

If you use the default workflow payroll process, you should go through these essential steps:

Payroll System Checklist

Paying Staff

Employment Documentation

Employment contracts

Employee Details

Name, address and National Insurance number

Payment Details

Bank account details so can pay employee directly on a set date each month.

Salary Information

Salary details including amounts and dates of payments.

Tax Details

Tax codes and returns

Sick Days and Holidays

Details of sick days and holiday entitlement and time used.

Company Benefits

Pension, healthcare and bonuses

Maternity and Paternity

Maternity and paternity leave.

Payroll Process Systems

Some payroll systems can calculate the amount of taxes that you must withhold from your employees’ paychecks. You may also have to include the amount that you pay for social security, national insurance or Medicare if based in USA. 

Payroll systems help you determine the amount of taxes that should be withheld from your employee’s paychecks.

Payroll Process Management

Checkify allows you to document your payroll process that can clearly define the steps in a checklist you must take in calculating and paying staff the correct wages, sending them a digital wage slip as well as knowing what payments need to be paid to the government.

Checkify is a Task and Process Management software that offers integration using zapier to some of the biggest accounting software on the marketplace. Allowing you to follow your business process while connecting with your accounting software.

Payroll Legislation and Rules

Comply with all employment and payroll legislation.

UK – In order to comply with UK employment law, employers must ensure that they issue employees with their pay statements at the end of each month. These should include information on how pay is calculated and what tax is deducted. Make sure within minimum wage legislation and end-of-year reporting requirements.

USA – Payroll and Employment Taxes Payroll law and regulations are designed to protect employers from illegal payroll practices. Employers must ensure that they comply with all applicable state and federal payroll laws and regulations. The Internal Revenue Service (IRS) enforcement of tax laws.

EU and GDPR Compliance – Obligations under the European Union (EU) and General Data Protection Regulation (GDPR). The EU is a large, diverse region with many different national laws, rules, and regulations. In addition to the laws enforced by each individual EU member state, there are also common rules and regulations that apply to all EU member states.

GDPR is a new set of rules governing how businesses collect, use, and disclose personal data.

EU Taxes and Reporting Requirements – Numerous requirements are imposed on employers and employees. Employers must pay wages, provide benefits, and withhold employee taxes. Employees must file income tax returns and pay employment taxes when required by law. The New Hire Record-Keeping Requirements of the Fair Labor Standards Act (FLSA) became effective in July 2008. FLSA requires employers to keep certain records related to employment relationships. These records are known as the “New Hire Record.