Page 21 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
Overview of the General Payroll Process
The next three sections describe how the payroll process flows for specific
types of systems: outsourced payroll, in-house computerized payroll, and
in-house manual payroll. This section covers, step by step, the general
beginning-to-end processing of payroll, irrespective of the specific pay-

roll system, so that you can see the general process flow. Though some
of these steps will not apply to all of the processes decribed later, this
overview will give you a good feel for how a payroll is completed. Here
are the steps:

1. Set up new employees. New employees must fill out payroll-specific
information as part of the hiring process, such as the W-4 form
and medical insurance forms that may require payroll deductions.
Copies of this information should be set aside in the payroll
department in anticipation of its inclusion in the next payroll.

2. Collect time card information. Salaried employees require no change
in wages paid for each payroll, but an employer must collect and
interpret information about hours worked for nonexempt employ-
ees. This may involve having employees scan a badge through a

computerized time clock, punch a card in a stamp clock, or man-
ually fill out a time sheet (see Chapter 2, “Accumulating Time
Worked”).

3. Verify time card information. Whatever the type of data collection
system used in the previous step, the payroll staff must summarize
this information and verify that employees have recorded the
correct amount of time. This typically involves having supervi-
sors review the information after it has been summarized, though
more advanced computerized timekeeping systems can perform
most of these tasks automatically.

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