50+ Sample Payroll Checklists

What is a Payroll Checklist?

A payroll checklist is a list of things that outlines the different aspects of payroll. It involves setting up the process and protocols when it comes to compensation and benefits of employees thoroughly and correctly without missing anyone from the employee list.

It is an obligation of the employer to provide compensation for a job done by the employees as stipulated in their employment contract. But there is more to the payroll process than meets the eye. It’s more than just issuing cheques or releasing payslips every two weeks. Any mistakes in the system can have a huge implication as delays in salary release can put someone in a difficult situation. In fact, the National Payroll Week survey in 2019 found that about 74% of employees believe that any delays in getting their paycheck make it hard for them to meet their financial obligations.

This is why it’s important to note that the payroll checklist should contain all key and standard minimum requirements for payroll to ensure that all specifics and particulars are correct during a pay period. It keeps the process documented and well organized as payroll is prepared bi-weekly, monthly, or annually. Moreover, it ensures that the process has a consistent schedule and abides by the law.

A payroll checklist also helps maintain and manage payroll systems such as paying employees and filing employment taxes. These systems are put in place to keep track of hours worked, calculate wages, withholding taxes and other deductions, as well as printing and releasing paychecks, and paying due government taxes.

Information Needed in a Payroll Checklist

A payroll checklist is like a general guide on successfully processing the company payroll with minimal mistakes within your system. It is a roadmap that you may follow to guide you in your payroll process. It gives you direction on how to navigate the complicated details of payroll. The checklist is an overview of the important steps involved you are guided when going through the payroll process. Make sure that you have the following information before processing your payroll:

Employee Record. If you are going to process the employee payroll, make sure that you have access to their number of hours worked, daily wage rate, overtime hours worked, and preferred payment method. Employees’ tax information (i.e., tax identification number, state tax ID information, and other IRS forms) should also be provided. Any changes in the employee roster or their information such as an address, pay raise or deductions, new hires or terminated employees should be included. Time keeping. Hourly workers are paid according to the number of hours they have worked during the pay period. Payroll processing should reflect the number of hours they worked and the rates due to them. The payroll system should have essential time-keeping systems to ensure that timesheets and time cards are submitted appropriately for correct computation and printing of timesheets.Wage Processing. There are different things to look out for when processing payroll. This includes entering and coding the hours worked, wage adjustments, bonuses, and commissions, severance pay, compensation and benefits, auto-payments, vacation, and sick leaves, etc.Calculation of Deductions. Salary deductions affect how much an employee takes home from their wages. This is a critical component when it comes to payroll processing that’s why utmost care should be observed. Make sure that only statutory government deductions and other voluntary deductions are subtracted from their gross pay. Paycheck or Direct Deposit Processing. The checklist must also include information on the employees’ preferred payment method—whether through cheque encashment or direct deposit. It must have a step for printing paychecks or pay stubs should the employee choose this option. On the other hand, if direct deposit is preferred, there should be a direct deposit step as well, particularly for direct deposit file generation. This file is then sent to the bank for verification before releasing the wages.Payroll budget account. Make sure that the payroll budget account has enough funds to pay for everyone’s wages. A bounced cheque does not reflect well on the company and may cause difficult financial situations for employees who rely on their salary to pay for their living needs.Reporting Methods. Under the law, employers are required to keep records within the last three years and should be open for inspection from the Department of Labor. The checklist must contain well-maintained payroll records, including registers and time cards for each pay cycle.

How to Create a Payroll Checklist

Considering that this is something that’s done regularly, businesses should be able to perfect payroll processing to mitigate payroll problems and improve the retention rate of the company. Payroll for a company doesn’t have to be a difficult task. There are several options that employers can take in order to process payroll on time and accurately. One of which is having a payroll checklist to ensure that you comply with federal and state laws. Here’s are few simple steps you can follow in creating a payroll checklist.

Step 1: Gather Preliminary Employee Information

Before processing your company’s payroll, you need to ensure that you have the complete information from your employees for tax purposes. You need to enter their personal information including their state and local tax identification numbers, social security number, their salary or wage information, direct deposit information, as well as their federal and state withholding accounts. This is to ensure that deducted taxes are paid to the respective recipients and payments are made during the correct schedule.

Step 2: Set-up a Payroll Schedule

A payroll schedule is essential in the automation of releasing employees’ salaries and wages owed to them within a certain pay period. When setting up a schedule, it should be aligned with what’s indicated in the employee contract. If weekly or bi-weekly pay is indicated, then the payroll schedule must be the same. It should also be the same if it’s semiweekly or monthly payroll. A payroll tax payment date should also be established to avoid missing out on the deadlines and ensure that taxes are paid on time and as scheduled.

Step 3: Plug in Employee Hours and Rates

Once the important details are entered into the payroll system, make sure that you have a clear method in calculating the employees’ hours worked on their shift schedule, rates, and overtime pay. Calculate how much each employee’s gross pay by adding their basic salary, overtime pay, and allowances, if there are any.

Step 4: Make Necessary Deductions

After getting their gross pay, determine all government-mandated deductions as well as other deductions that were previously agreed upon. These include federal and state income taxes, local taxes, medicare taxes, social security withholdings, and other wage garnishments (where applicable). You can then subtract the total deductions from their gross pay to get their net pay.

Step 5: Review Payroll and Release Paychecks

Make sure to double-check and ensure that the figures entered in your payroll system are correct. This added step is essential to prevent any confusion and minimize errors. A final pass of the payroll can help identify any discrepancies in the data before entering the amount for a deposit or writing a paper check. Once correctness of the computations is guaranteed, you may now release the paychecks through direct deposit to the employees’ payroll account or through a signed cheque. A payslip indicating the employees’ earnings and deductions should also be provided to them.

Step 6: Complete Follow-up Tasks

It is important that after each pay period, you complete all follow-up tasks such as keeping all document payroll records, reporting new hires and terminated employees to the IRS, and staying updated with any miscalculations or mistakes which should be calculated and reported to the IRS.

Importance of a Payroll Checklist

Payroll processing is an important activity in any organization, regardless if it’s a small business or a big corporation, and having a checklist ensures that all processes are being adhered to. Aside from compliance to processes here are other reasons why a payroll checklist is essential in any business:

Brings Rigid Structure to the Payroll Process

Using a payroll checklist ensures that standard payroll practices are followed to the tee. A checklist ensures that no steps in the payroll operations are skipped nor forgotten and it smoothens its process flow. With every box on the list ticked or crossed off, it gives assurance that every part of the compensating employees is serviced as needed.

Provides Visibility and Transparency

Makes it easier to pinpoint the root cause of any problems or issues that may arise. It shows proper delegation of tasks and ensures accountability of the person responsible for each task performed. The payroll checklists guarantee that weekly, monthly, quarterly, or any payroll schedules are done on time and without any delays.

Keeps Organized and Detailed Financial Records

When there are changes in the employee list for various reasons such as resignation, termination, or a new hire, these entail changes in the payroll list. By using a checklist, the payroll system is maintained and remains organized but these changes in details are recorded and kept in the financial records. It also makes reporting to the IRS a little easier and not missing the deadline.


What does payroll processing mean?

Payroll processing simply means compensating employees for the work or service rendered on a particular pay cycle. It includes computing total wages earned, withheld deductions, filing payroll taxes, and delivering payment to the employees.

What is a typical payroll cycle?

The most common payroll cycle or pay period in the US is biweekly which amounts to 26 cycles in a year. Other options for pay cycles are weekly, semi-monthly, or monthly pays. The cycle will depend on the company policy and as stipulated in the employee contract. In the end, the payroll schedule will depend on state payday requirements, if not, it may depend on the reconciliation of whichever pay period works best for the company and the employee.

Does payroll need to be automated or can it be done manually?

Payroll can be both. Businesses with many employees may choose to automate their processes using HRIS that’s available to them. However, small businesses that choose to process payroll manually, need to keep exact records of worked hours, wages paid, worker classifications, etc. Calculations must also be correct and all necessary government taxes are filed and paid for to avoid costly penalties.

How long does it usually take to process payroll?

The method chosen to process payroll will determine how long the payroll processing takes. Manual calculations usually take hours or days to complete depending on how large your payroll list is and the number of laws that you need to comply with. A more efficient and time-saving approach to payroll is through a software application that can run the entire process within minutes because of the automation of the process.

The payroll checklist is an important document that every HR practitioner must know. This will ensure that payroll processing not only goes smoothly but helps in maintaining and keeping details of company financial records organized. It also ensures that all state and federal taxes are paid on time to avoid penalties and it also serves as a reminder to report hiring changes to the IRS within the required timeline. So, the next time you need to pay your employees, make sure that you have a payroll checklist that you may download from our site.