Question

List and describe seven facets of payroll preparation

Answer 1

The seven facet in payroll preparation are listed below:

Facet 1 Updating of payroll master file: The human resource department provides information on new terminations, hires, changes in discretionary withholdings, and changes in pay rates. The changes need to be recorded in a proper timely approach and reflected in the next pay period.

Facet 2 Updating of rates on tax and deductions: On receiving the notification of changes in tax rates and other deductions in payroll from insurers, government agencies, unions, etc.; the payroll department should implement it.

Facet 3 Validate attendance and time data: The information on attendance and time comes in many forms depending on the pay scheme of the employee such as hourly basis, electronic time clocks, time card etc. Moreover the employees are also paid base salary plus commission or straight commission, bonuses on surpassing the targets. To carefully recording this payroll system is required to link to the revenue cycle and other cycles to compute these payments

Facet 4 Prepare payroll: The transactions on payroll are processed, which provide details of each employee’s gross pay, net pay and deductions in a multi-column format. Several other payroll reports and government reports are also produced in it.

Facet 5 Disburse payroll: The approved voucher n disbursement and payroll register are dispatched to the cashier, who reviews them; prepares and signs the payroll check for the fund transfer; signs, reviews, and distributes employee paychecks; the unclaimed checks are re-deposited in the bank account of the company; sends paychecks list for investigation to internal audit; returns the register of payroll to the payroll department; and sends the voucher of disbursement to the accounting clerk on updating the general ledger

Facet 6 Computation of employer-paid benefits and taxes: The employer withholds state and federal taxes from paycheck of employee, along with the employee’s share of Social Security, and Medicare tax. There may be voluntary deductions such as United Way contributions, union dues, retirement contributions, etc.

Facer 7 Disburse payroll taxes and miscellaneous deductions: The organization need to periodically prepare EFT or checks to pay tax and other liabilities.