Chapter 4

Payroll

What Is the Payroll Process Flow?

The payroll process is a principal function of the accounting department, and as the bookkeeper, you should be thoroughly conversant with how it operates. The following steps reveal not just the basic payroll processing, but also a few related functions that precede and follow a typical payroll:

1. Set up new employees. New employees must fill out payroll-specific information as part of the hiring process, such as the W-4 form and medical insurance forms that may require payroll deductions. Copies of this information should be set aside in the payroll department in anticipation of its inclusion in the next payroll.

2. Collect timecard information. Salaried employees require no change in wages paid for each payroll, but you must collect and interpret information about hours worked for nonexempt employees. This may involve having employees scan a badge through a computerized time clock, punch a card in a stamp clock, or manually fill out a timesheet.

3. Verify timecard information. Whatever the type of data collection system used in the last step, you then summarize this information and verify that employees have recorded the correct amount of time. This typically involves having supervisors review the information after it has been summarized, though more advanced computerized timekeeping systems can perform most of these tasks automatically.

4. Summarize wages due. This should be a straightforward process of multiplying the number ...

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