Guide for Managing Payroll Reconciliation For Small Businessby Ledger Bench LedgerBench is your trusted accounting & bookkeepi
Payroll Reconciliation means verifying all your employees are paid correctly. It also means, all taxes are paid and reported accurately.
Regardless of your business, payroll reconciliation involves different accounts such as:
- Federal taxes
- State taxes
- Insurance Deductions
- Social Security Withholdings
Let’s take an example here: Your employee earned $2000 during the pay period but received $1500 as the rest of the money was disbursed appropriately on the above accounts. Here, payroll services reconciliation would entail verification of all the accounts involved with the transaction agreed upon.
While formulating payroll, accountants must make sure their calculations are correct. Prior to submitting payroll, the accountant audits for entry errors and makes adjustments as necessary. Ensure that the entries are posted to the right accounts.
After the completion of payroll, CPA would review the entries for accuracy and validate things such as payroll tax entries, withholdings and overtime to ensure the transactions are correct. As part of reconciliation, CPA verifies the accuracy of payroll posted to the right accounts.
Earnings and payroll registers:
Verifying earnings is also an essential part of payroll. It involves double or triple checking of overtime, hourly and salary wages. The figures from individual checks are compared against earnings and payroll registers. The transaction for the pay period must equals the payroll.
Reconciling against Budget:
This is another reconciling of payroll against budget. The CPA uses actual figures and compares them to budgeted figures for the period. A report can be generated to provide an overrun of budget to the department manager when the salaries are over or under budget.
How to reconcile payroll for small businesses:
- Around two days before payday arrives, reconcile accounts to confirm all workers have been paid accurately.
- Print a payroll register that summarizes deductions and wages for each employee.
- Balance the information against time cards and the figures the payroll system states your employees have been paid. In this process, make sure to verify salaries, regular employee wages, bonuses, commissions, overtime, any extra type of payment. You should also verify insurance, taxes, garnishments, and any other type of deductions.
- Anytime you spot an error, it's important to rectify the problem before you pay your staff.
- You can perform monthly payroll reconciliation.
LedgerBench provides small business accounting services.
Created on May 11th 2020 07:55. Viewed 301 times.