Page 38 - Essentials of Payroll: Management and Accounting

EXHIBIT 1.4 Cr eating a Payr oll System
The In-House Computerized

Payroll Process

Back up
computer files.

Transfer Process Print and Send direct
Investigate
missing time timekeeping payroll on review OK? Yes File payroll deposit
reports.
card scans. file to payroll in-house preliminary instructions
system. software. payroll reports. to bank.
No
Deposit
Review
employee- withheld and
matching
entered
changes. federal taxes
at bank.
Deposit
withheld state
income and
other taxes.
Related Activities
File annual Issue annual
File quarterly
federal W-2 forms to Distribute
federal tax
unemployment employees and paychecks.
return.
tax return. government.
review these changes. Further, the process flow assumes that the time-
keeping database used by the time clock computer feeds directly into
the in-house payroll software, which eliminates the keypunching of pay-
roll data. If any of these automation elements are not present, then the

process flowchart appears as a mix between in-house computerization
and a manual system, which is shown later in Exhibit 1.6.
There are several key differences between the automated in-house
system shown in Exhibit 1.4 and the outsourced solution in Exhibit 1.2.
A key difference is that an in-house system requires the payroll department
to file several tax returns, which would otherwise have to be filed by the
payroll supplier.These include the quarterly federal tax return, the annual
federal unemployment tax return, and annual W-2 forms to employees.

11