Payroll Outsourcing

What Is Payroll Reconciliation?

Reconciliation in accounting involves confirming transactions are in balance and apply to the correct account. For occasion Payroll service, NEEDS reconciling payroll, a payroll transaction involves different accounts. If an employee earned $1, 500 during a payroll period but only receives $950, the slumber of the money would go to such things as taxes, Social Secureness withholdings, Medicare and insurance deductions.

Reconciling that payroll check would involve confirming that all the accounts influenced bythe salaries transaction agree and total to the gross amount used in calculating the check.

How to Reconcile Payroll

  • Confirm the pay period hours for each employee match time card
  • Ensure the rate of pay for each employee is accurate.
  • Confirm that wages owed to each employee match the pay period calculations, basedon rate of pay and number of hours worked during the period.
  • Verify that all pay deductions for each employee are accurate.
  • Verify that payroll expenses for the period are scheduled for debit from the correct company account.
  • Verify that pending payroll expenses match both the entries made to your accounting software and the physical checks to be issued for direct deposit or withdrawal by your employees.

Payroll Reconciliation

Accountants and clerks must validate that their calculations are correct, particularly when formulating payroll services. Prior to submitting salaries, the accountant or clerk audits their entries for errors and make any adjustments as necessary. Once payroll is submitted, the accounting system will generate the individual payroll bank checks requiring printing.

After salaries, the accountant often reviews the entries built to ensure they are correct and posted to the right accounts. Another form of reconciliation is to check that taxes for the period post against the correct Social Security numbers.

Validating Transactions

After completing salaries, the accountant or attendant reviews the entries for accurateness and validates such things as payroll tax entries, withholdings and overtime, however, tomake certain transactions occurred correctly. The reconciliation or handling of payroll services will include making entries to distribute payroll to the appropriate cost accounts.

As an example, salaries of those in manufacturing directly in charge of creating the product accumulate in an account entitled “cost of goods sold.”The accountant verifies that the correct payroll posted to this account as part of reconciliation.

Earnings and Salaries Registers

Other reconciled areas include verifying the accurateness of earnings. This involves double-checking overtime, hourly and salary wages for correctness. The figures from individual inspections are compared against revenue and payroll registers to guarantee these accounts are in agreement. When you add together the duty accounts, the various withholding accounts and everything accounts associated with payroll services together, the transactions for the period must equal the payroll. Click here to get about income tax withholding from wages.

Reconciling against spending budget

One more form of reconciliation completed for payroll services is making up payroll against the cover the period. The scrivener or clerk uses actual figures and compares them to the budgeted statistics for the time. A survey may be made to provide to a department manager that shows areas where salaries are over or under budget. Footnotes will be included with these details for use by the manager when seeing with upper management to clarify budget overruns.