Decoding Payroll Reconciliation

Similar to reconciling any other account on the general ledger, payroll reconciliation is important to make sure that a company is making payments in accordance with its contractual obligations. Moreover, it's crucial to ensure:

  • Workers are receiving the promised compensation in accordance to the labor laws of relevant jurisdictions.

  • The company is remitting and filing for taxes appropriately.

Guide for Running Payroll Reconciliations

1. Prep Documents

  • Gather all of the relevant bank statements, wallet transactions, contractor invoices, etc.

2. Prep Accounting Software

  • Determine how granular you want to organize payroll taxes on the chart of accounts. Options include:

    • Salaries & Wages

    • Contractor Payments

    • Employee Paid Taxes

    • Employer Paid Taxes

  • Consider breaking out your tax accounts to track on a per state basis.

  • Be sure to also separate out payments for any perks programs like health insurance and 401(k) programs.

3. Define the Reconciliation Period

  • Typically, this is for the last month or quarter. Due to the filing requirements of each state, monthly reconciliation is recommended.

4. Company Reconciliation Process

  • Line the payroll journal report from your payroll system against all of your documentation.

  • Ensure that the debits from your bank and wallet accounts match the totals charged in the payroll history.

  • Break down the transactions into how they should be split or organized into the relevant chart of accounts.

5. Check Sum

  • Ensure that the totals for the period match your debits again once all of the entries are made in your accounting system.

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Incubated by Serotonin, a product studio and marketing firm for transformative technologies.

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© Franklin Systems Inc. 2024

Incubated by Serotonin, a product studio and marketing firm for transformative technologies.

Audited By

Powered by Alchemy

© Franklin Systems Inc. 2024