Page 260 - Essentials of Payroll: Management and Accounting

Payments to Employees
The much more common method for issuing checks is to integrate
this task into the workings of a standard payroll software package.Under
this approach, the software generates a payroll register report, which the
payroll manager reviews and approves. If it is acceptable, blank checks

are loaded into the local printer and the software quickly churns out
completed checks. Checks are then taken to an authorized signer for a
final review and signature (note, however, even this step can be avoided
by adding a signature image to the checks before they are printed). If
the cashed checks are not returned by the bank, retrieve them either by
contacting the bank to request check images be mailed to the company,
or access the images online and print them out.

If a payroll supplier is used,it will print checks and send them to the
company for distribution to employees. Additional supplier services
include incorporating a signature image on the stamps,stuffing the checks
into envelopes,and sending them directly to multiple company locations.

Direct Deposit Payments
Direct deposit is the most prevalent method for paying employees. It
involves the direct transfer of funds from the company payroll account

T IPS &T ECHNIQUES

When a company has a sufficient number of employees to warrant
issuing a large number of payroll checks, it usually opens a separate
bank account from which to issue them. This makes it much easier
to reconcile the account at month-end. However, if payroll is out-
sourced, the checks are run through the supplier’s bank account,
with only two deductions being made from the company’s account—
a total deduction for all payroll taxes and a total deduction for all net
pay amounts. With only two entries being made per payroll, there is
no longer a need for a separate payroll account at the bank.

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