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Payroll Operations Requirements

To many, payroll is simply issuing paychecks. If pressed, the may say that the payroll department issues payroll checks, maintains compliance with tax laws, records paperwork for new hires and edits existing employee files. In reality, payroll is waaay more detailed that most people realize.

What Things Are Payroll Operations Specialists Responsible For?

Payroll Operations Specialists are responsible for not only processing payroll and ensuring proper payments to employees and tax-collection authorities, but a slew of related work, including:
  • Maintaining accurate payroll records, such as hours worked, pay, and tips and tax amounts
  • Tracking, paying, and reporting on Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) deductions
  • Tracking and processing exemptions, insurance, fringe benefits, retirement plan deductions, T&E reimbursements, and leave time accrual
  • Accurately tracking and processing garnishments, levies, and other deductions
  • Retaining records and forms, such as I-9s and eVerify
  • Comply with various wage and hour laws and IRS regulations
  • Distributing payments through checks, paycards, and/or direct depositPayroll Operations Training & Certification Program
  • Doing payroll reconciliations
  • Updating job titles, departments, transfers
  • Deciding on the payroll system and/or related vendors
  • Creating and/or working on disaster plans
  • Complying with reporting requirements
  • Sending W2s and 1099s (on a timely basis!)
  • Correcting payroll errors
  • Detecting fraud
  • Complying with state and federal rules re unclaimed paychecks
  • Self-auditing the payroll process (see more info on auditing at the bottom of this page)
  • Working with state or federal audits
  • Documentation
  • Recordkeeping
Employers should note that some or all of the above-listed items also can apply to requirements from the Family and Medical Leave, Occupational Safety and Health Administration, and state agencies.

On top of all this, Payroll Operations Specialists must know which of many types of forms to use, when to submit them, and what to do if they find an error. They also must deal with employee questions, handle deduction and status changes, and keep up with state and federal laws - plus keep track of it all!

Integrating With Other Departments

In addition to all of the items listed above, the Payroll Department is responsible for furnishing data to various departments throughout the company. These departments include Human Resources, Finance, Accounts Payable, and Accounting. This information includes benefits, taxes withheld, and the journal entries required to post payroll to the general ledger.

Due to the nature of their job functions, the Payroll and HR departments have confidential employee information, including social security numbers, financial information, and home and email addresses, to name just a few. The two departments must work together to ensure that this information is kept confidential - and for some information, kept in separate places.

Bottom line, Payroll Operations Specialists have to be very detailed and time conscious - and have a way to get and stay trained on the specifics of running the payroll department. That's where our Payroll Operations Training & Certification Program can help! It includes instructions for completing the forms, dates for submission, making changes or correcting errors, etc. Click the link for more details or to order.

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Some Suggestions For Payroll Operations

Sample List of Audit Tasks

For Self-Audits
Below are just some of the things to consider when doing a self-audit:
  • Taxable Wages
    • Is the definition of taxable wages for each tax correct?
    • Are the wage bases properly used and updated?
  • Form W-4
    • Are exempt forms discontinued each year at the appropriate date?
    • Are all forms properly completed?
    • Are all forms that are required to be submitted to the IRS and the state submitted?
  • Form W-2
    • Are the forms furnished to the employees properly and on time?
    • Are the forms furnished to the Social Security Administration in the proper format and on time?
    • Are the forms reconciled to the payroll and the Form 941 before being submitted?
    • Are duplicate forms issued properly?
    • Are forms retained for the proper period?
    • Is the pension plan box marked appropriately?
  • Form 940
    • Is it completed correctly?
    • Is it submitted on time?
    • Is it reconciled against the payroll?
For External Audits
During an external audit, payroll records will be reviewed. It is also possible that payroll staff members will be interviewed by the auditors. Depending on the scope of the audit, these questions asked could include:
  • What are the procedures for storing and signing checks?
  • Who verifies and approves the payroll?
  • How is the validity of tax deposits determined?
  • How are payroll transactions recorded in the general ledger?
Suggestions For Disaster Recovery Planning

Disaster Recovery Plans have to take into consideration that the event occurred during office hours and that the payroll personnel may not be able to leave. The Payroll Department should make sure that they:
  • Back-up systems routinely and that a copy of the backup file is sent to any emergency sites that have been established
  • Store primary backup files offsite in a place where they are accessible 24/7 by the payroll personnel and not in a timed vault
  • Have safes that are fireproof
  • Keep a file with offsite backups of all forms the department uses such as direct deposit forms or address change forms in case the payroll office sustains damage
  • Cross train the payroll staff (all functions and all employees for larger companies)
  • Establish emergency cabinets inside the payroll office with flashlights, extra batteries, a battery operated radio, coins for the vending machines (if the power is still on), emergency ration packets, a battery operated clock, one gallon of water for each employee and a first aid kit in case leaving the payroll office is not an option
  • Have a master list of all voicemail passwords for all employees in the department
  • Keep one cell phone charged and operational at all times
  • Keep copies of all payroll system and procedure manuals with back-up files at the emergency and offsite locations
  • Have contact numbers on hard copy files (not in the computer) for each key employee and team member
  • Test to make sure that computers and back-up files can actually be read and restored
  • Keep all information and rations up to date
Much of what is included above is excerpted from our Payroll Operations Training & Certification Program.

Excerpts From Our Payroll Operations Training & Certification Program

Below are a couple of samples from our payroll operations training course. These excerpts provide a quick overview of payroll requirements that someone new to payroll might not have even heard of; instructions for completing the forms, dates for submission, making changes or correcting errors, etc. are included in the course itself.

Want to see more of what is covered? Click here to see the complete list of topics covered by this course.

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