While the majority of our clients must keep their financial records in compliance with DCAA, maintaining accurate and reliable payroll accounting records is a prime responsibility for all business owners.

Time card records presented by the employee should be reviewed and approved by the assigned supervisor before the paychecks are created. Worked hours need to be recorded correctly among appropriate labor categories. Use of fringe benefits such as holiday, PTO, and Inclement Weather/Site Closure should follow the company’s written employment policy.

It is the responsibility of the employer to review all paycheck information presented on any external payroll company report or processed through a QuickBooks based program. Taxes, 401K contributions, medical insurance, flexible spending allocations, and any other voluntary deductions need to be monitored to be sure they agree to the employee’s instructions. If the payroll company does not handle the remittance of 401K, FSA, or H.S.A. deductions to the investment company, the employer should process the remittances timely, accurately funding the amounts deducted.

Payroll tax remittances need to be made timely according to the rules of the federal, state, or county jurisdictions. Confirmation of remittance reports should be readily available from your payroll company. If you suspect taxes are not being timely remitted, you can contact the tax agency directly and receive a report of funds received.
For Federal payroll taxes go to https://www.eftps.gov/eftps/ to register to access your payment history. For state tax remittance inquiries, go to http://www.irs.gov/uac/Contact-a-Local-Taxpayer-Advocate to view contact information for your state’s taxpayer advocacy office.

Retirement plan employee deferrals and employer match remittances need to be made timely. It is the employer’s responsibility to ensure that the deduction and match transactions are being properly processed by the payroll department or external payroll company. Out of cycle payroll calculations, such as a separate payroll run for bonuses, sales commissions, overtime, or adjustments to time worked, all need to have the appropriate 401K deferral and employer match applied to those earnings. In certain situations, missed 401K deductions from employee paychecks may become an expense to the employer.

Recording the time card and payroll information in your accounting software needs to be done timely. QuickBooks, in particular, can provide useful reports that are easy to create and easy to understand. The payroll summary report when set to display by ‘total’ will help you confirm that the information recorded agrees to the payroll company reports. The same report displayed by employee, will allow easy viewing of variances that may relate to a simple miscoding, to an inappropriate selection of labor categories, or even abuse of the fringe benefit policies. Regularly reviewing your payroll information in your accounting software will save you time and money by presenting complete and accurate payroll information when we are asked to prepare your company’s financial statement.

You can refer back to the December 2010 blog on this website for specific details on recording payroll data in the QuickBooks program. If you need assistance, or just a little enlightenment, don’t hesitate to contact our office.

Submitted by: Susan W.