Reports for your payroll processes come in many shapes and sizes. Here’s what you need to know about compliance and which to use.
Here's what you need to know about what payroll reports cover and everything you need to know about payroll reporting:
- Depending on your needs, there are different ways to filter payroll data.
- Around 40% of small to mid-sized businesses incur IRS penalties related to incorrect payroll filings
- To reduce payroll costs and time spent on each report, it helps to have a comprehensive template.
Payroll reporting is a mandatory business requirement and a core activity for accounting and HR teams. And while it’s possible to outsource payroll processing to a payroll services provider or invest in payroll software, many still choose to complete payroll reports the old-fashioned way.
However, there’s more to generating these documents than keeping a simple excel sheet – no matter how you choose to provide the IRS and state departments reports about your:
- Payroll costs
- Tax withholdings
- Other relevant data
As your organization grows and regulations continue to become more complex, keeping track of payroll activities requires several in-depth reports. These reports help you manage your compliance requirements. They also assist in preventing overpayment, fraud, and information inaccuracies.
And inaccuracies in payroll reporting can cost you big time.
Around 40% of small to mid-sized businesses incur IRS penalties related to incorrect payroll filings and suffer an average fine of $845. Over 50% of workers are affected by payroll issues, and half of all employees would choose to find a new job after two paycheck problems.
What are payroll reports?
Payroll reports are documents containing essential employee, team, and department information and are used to verify tax and accounting details. There are several specific payroll reports that employers and HR professionals can generate, depending on how you want to slice and dice the data.
Inaccuracies in payroll reporting can cost you big time.
A payroll report may require the following information:
- Full employee name
- Employee ID
- Hourly rate
- Regular hours
- Overtime hours
- Vacation hours, sick leave, and other hours
- Regular and overtime wages
- Additional earnings, such as bonuses, commissions, or tips
- Gross pay
- Employee taxes
- Federal Unemployment Tax Act or FUTA tax
- Medicare Tax
- Social Security Tax
- Net pay
- Employee 401(k) contributions, if applicable
Depending on your needs, there are different ways to filter payroll data. Some payroll reports are used for calculating taxes and ensuring compliance. In contrast, others can help specific departments better understand their employee productivity and ROI.
What are some standard payroll reports?
Here are 7 types of payroll reports:
- Payroll Summary Report – This type of document offers an overview of an individual employee’s payroll history during a pay period. A payroll summary report includes gross and net wages, all tax withholdings, and miscellaneous deductions.
- Payroll Register Report – A register is similar to the payroll summary and contains information relates to gross wages, deductions, tax withholding, and net wages. However, this tends to be a more comprehensive register of payroll information and lists information about every employee. A payroll register is typically used when submitting tax payments and filing returns.
- Labor Distribution Report – This is a breakdown of payroll costs by department.
- Payroll Detail Report – Usually run monthly, this document offers in-depth information about employee gross wages and benefits. The finance team uses this payroll data to reconcile payroll costs.
- Employee Detail Report – This payroll activity maintains all information about an employee and is used to verify w-2 forms. Data found in an employee detail report include the individual employee’s full name, address, social security number, and address.
- History Summary Report – As the name implies, this includes an individual employee’s previous pay amounts, deductions, taxes, and rate changes for a specific pay period.
- Revamped All in One Report – This is customizable and includes all payroll activity, including historical data.
Typical tax-specific payroll reports
Below are 5 reports required for tax filings:
- Tax Payments Report – This is a summary of taxes paid over a period of time.
- Tax Liability Report – This includes total tax liabilities, including how much is still owed to the government.
- Wage and Tax Summary Report – This summarizes employee information, pay, and tax information for a given pay period.
- Deductions and Contributions Report – Payroll data in this document hones in on every benefit and employer contribution deduction.
- Certified Payroll Report – Government contractors must submit a form WH-347 to the IRS weekly, as well as state or local government-specific forms.
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How do you process payroll and payroll taxes?
If you aren’t outsourcing payment processing to a third-party accountant or payroll service, it’s crucial to have a straightforward process. You can choose to process payroll on a weekly, bi-weekly, semi-monthly, or monthly basis.
You can choose to process payroll on a weekly, bi-weekly, semi-monthly, or monthly basis.
The steps for processing payroll include:
- Calculate the gross wages for each individual employee
- Subtract the federal income tax, state income taxes, FICA taxes, and other related deductions from their gross wage
- Calculate the amount you need for both the employer and employee side of FICA taxes. These should be equal.
- Send the employee’s net pay to their bank account or via check.
- Pay taxes, including the tax withholding from the employee’s wages, the employee’s FICA tax, and the employer’s FICA contribution.
- File related payroll reports to the IRS and state agencies.
Essential IRS forms to file can include Form:
- 940 – Federal Unemployment Tax Return
- 941 – Quarterly Tax Return
- 944 – Federal Tax Return
- 945 – Withheld Federal Income Tax
- W-3 – Transmittal of Wage and Tax Statement
Is a payroll report mandatory?
The IRS requires quarterly payroll reports specific to:
- Social Security
- Workers’ compensation
- Unemployment or FUTA tax
- Medicare tax
There are also state-specific requirements for payroll reports, but most mandate that they be filed quarterly. For the IRS quarterly reports, you’ll need to submit Form 941.
The IRS also requires businesses to submit annual reports to complete their taxes, including a Form 944 to confirm unemployment tax payments.
When should you produce payroll reports?
Typically, you would submit your payroll reports to the IRS with your regular tax filings. These due dates are:
- April 30
- July 31
- October 31
- January 31
State-specific laws may overlap with IRS filing dates or may have their own schedule.
What do payroll auditors look for?
Your business may have to go through a payroll audit, although, ideally, you will be routinely auditing your payroll process. Payroll auditors should review the accuracy of payroll records, how these records are organized, and whether sensitive data is adequately protected.
To prepare your team for a potential external audit, it’s good to review your payroll processes internally. In particular, you’ll want to regularly:
- Review and verify pay rates for each employee
- Ensure that each employee is classified correctly according to FLSA standards
- Confirm that terminated employees are no longer active in the system
- Evaluate the status of independent contractors and vendors
- Compare your payroll data with accounting’s general ledger
- Reconcile bank account statements with payroll pay period data
- Double-check tax calculations and payments
When looking at payroll compliance, you must be sure that your payroll process is aligned with the following federal regulations:
- Fair Labor Standards Act (FLSA)
- Federal Insurance Contributions Act (FICA)
- Equal Pay Act (EPA)
- Federal Unemployment Tax Act (FUTA)
These laws cover minimum wage, child labor, overtime, recordkeeping, employee classification, Social Security tax, Medicare tax, unemployment tax collections, and wage discrimination practices.
Where can you find a payroll summary report template?
To reduce payroll costs and time spent on each report, it helps to have a comprehensive template. We have created an information guide and high-quality Microsoft Excel payroll reporting template for labor distribution and payroll register reports. These templates can also be easily modified to match your specific reporting needs.
Check out this free tool for small businesses and HR professionals to streamline your payroll process today