Page 24 - Essentials of Payroll: Management and Accounting

Cr eating a Payr oll System
prior paycheck; for an advance; or perhaps because of a termina-
tion. Whatever the reason, the amount of each manual check
should be included in the regular payroll, at least so that it can be
included in the formal payroll register for reporting purposes, and

sometimes to ensure that the proper amount of employer-specific
taxes are withheld to accompany the amounts deducted for the
employee.

9. Create payroll register. Summarize the wage and deduction infor-
mation for each employee on a payroll register; this can then be
used to compile a journal entry for inclusion in the general ledger,
to prepare tax reports, and for general research purposes. This
document is always prepared automatically by payroll suppliers
or by in-house computerized systems.

10. Verify wage and tax amounts. Conduct a final cross-check of all
wage calculations and deductions.This can involve a comparison

to the same amounts for prior periods or a general check for both
missing information and numbers that are clearly out of line
with expectations.

11. Print paychecks. Print paychecks, either manually on individual
checks or, much more commonly, on a computer printer, using
a standard format that itemizes all wage calculations and deductions
on the remittance advice. Even when direct deposits are made, a
remittance advice should be printed and issued.

12. Enter payroll information in the general ledger. Use the information
in the payroll register to compile a journal entry that transfers the
payroll expense, all deductions, and the reduction in cash to the
general ledger.

13. Send out direct deposit notifications. If a company arranges with a
local bank to issue payments directly to employee accounts, a

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