What Is a Payroll Report? 5 Types of Payroll Reports
Payroll reporting is important for tax purposes and your accounting. There are several types you may need for your business. Let’s break them all down.
Payroll doesn’t have to be complicated or boring. Payroll reports are quite beautiful actually. As payroll is most likely your largest business expense, it is vital that you keep track of it over time. What gets measured gets managed as they say.
Here’s What We’ll Cover:
What Is a Payroll Report?
A payroll report is a document that collates payroll data. There are multiple different types of payroll reports:
1. Company Payroll Reports
Company payroll reports are exactly as described. They give you a detailed snapshot of the company-wide payroll expenses for a given period of time.
With this information, you can more accurately predict your cash requirement for payroll from month to month. You can also calculate your FICA taxes every quarter. That is the Federal Insurance Contributions Act.
2. Employee Payroll Reports
Employee payroll reports zoom in on the specific employee. It should show employee wages, taxes and deductions clearly. This is also known as a pay stub or employee earnings report. Each employee should receive this every month and have full access to previous reports too.
3. Payroll Tax Reports
These are the payroll reports that you probably fear the most. No margin for error when it comes to the federal government!
As a business owner, you have to produce these reports to show your employee compensation on an annual and quarterly basis. You then deliver these to the federal, state or local governments to calculate your payroll taxes.
The federal payroll tax reports you need to be aware of are:
- Form 940: An annual report for Federal Unemployment Tax Act (FUTA) tax
- Form 941: A quarterly report for FICA taxes and federal income tax withholding
- Form W-2: An annual report for employee compensation and tax withholding
Check your state government website for the equivalent forms you need to submit to them.
4. Certified Payroll Reports
If you are a government contractor, you have to submit certified payroll reports on a weekly basis. The federal certified report form is called the WH-347. If you are working for the local or State government, they will have their own equivalents.
There is absolutely no margin for error here. If you feel a little anxious about your ability to accurately report payroll expenses, contact an accountant. They will help you submit your first certified payroll report.
5. Time Tracking Reports
If your employees are required to fill out timesheets, then time tracking reports help you to see your business activities. You can set the parameters for total hours worked for a client overall. This will help you invoice clients more accurately for the work your team has completed for them. Alternatively, you can use time tracking reports on a micro level to see how your employees are doing with their time management.
The Golden Rules of Payroll Reporting
1. Create frequent payroll reports to track expenses
You need to create reports annually and quarterly at least for federal income taxes. For me in my business, I opt to create monthly reports too. As a small business owner I have variable income so it helps to track payroll expenses more frequently.
2. Make sure the report measures up to performance
It’s worth keeping an eye on absent days with employees as well as “time theft”. This is when employees are charging you for extra time that doesn’t add up with their work output. Payroll reports will help highlight discrepancies.
3. Use accurate payroll software to help
Manual timesheets are a relic of the past. Now we have online software that can help track your payroll expenses and taxes. The right software can even automate payroll checks and eliminate payroll errors.
4. Hire an accountant
When it comes to calculating employer taxes, federal payroll reports are essential. That said, they can be quite complicated if you are new to them. Hiring a reliable accountant can help you better understand your tax liabilities.
Payroll reports are essential to the smooth running of any business. When you want to track your expenses and taxes over time, creating these reports is only to your benefit.
For more guides and tutorials like this one, check out our resource hub!