Reconciling the General Ledger to Your Payroll Register

Payroll reconciliation is the process of ensuring exact alignment between your total payroll expenses and the information posted in your general ledger. Total payroll expenses include wages and salaries; employer liabilities; and any employee withholding for payables, insurance, or taxes. 

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Overall, payroll reconciliation is necessary for tax purposes, compliance, accurate record keeping, and ensuring that your employees are accurately and fairly paid. It also protects your business against fines, penalties, or legal action due to employee grievances over payroll. Finally, payroll reconciliation helps you accurately gauge your business’ financial wellbeing.

In this article, we’ll explore the key facets of payroll reconciliation and show you how Workforce PayHub can help you achieve consistent accuracy between your general ledger and payroll register.

Key Facets of Payroll Reconciliation

Salaries & Wages

As one part of payroll reconciliation, you must calculate an employee’s gross pay relative to the hourly pay rates or salaries documented in your general ledger and payroll register. For businesses with less than 50 employees, this part of the process can be relatively straightforward, but you still need to account for any recent changes: new hires, promotions, raises, or any other salary changes that could impact your general ledger or payroll register.

Hours Reported by Employees

In addition to ensuring accuracy between timesheets/time cards and your payroll register, in this phase of payroll reconciliation, you must factor in overtime, sick pay, and holiday pay. Miscalculating here could mean under or overpaying your employee(s) on important fringe benefits. This part of the process can become more involved and complicated if you’re evaluating payroll for multiple departments. 

Accounting for Deductions & Taxes

In January of each year, most benefits renew and tax policy updates initiate, so it’s important to ensure that all of the information in your payroll register is precise and up to date. Consider that you must account for withholding for a number of FICA, SUTA, and FUTA taxes – including Medicare and social security – plus state income tax and federal income tax. Other paycheck deductions like worker’s compensation, retirement benefits, health insurance, local taxes, and wage garnishments will also factor into your reconciliation process. 

Remember that these deductions must be reported separately and not as a total amount. Before you file business taxes, it’s important to not only confirm that your numbers are accurate, but also to stay fully informed of any federal, state, or local changes to deductions and withholding policies. These changes (to state overtime laws, as one example) could impact your payroll on a broad scale, so it’s best to double-check with finance and labor law experts before moving forward.

Finally, remember to factor in any internal payroll changes that might affect your filing and reporting: a new employee, a withholding update from one of your employees, a promotion that made one of your employees eligible for healthcare, or other scenarios.

Simplify and Streamline Reconciliation with Workforce PayHub

Whether your small business is manually managing payroll or already using a payroll system, we’re here to help you complete payroll reconciliation in an easy and stress-free way. Our payroll services can help you create a general ledger, secure your data, automate accurate payments, and keep your business in full compliance and free of any legal concerns. 

Our payroll services also accommodate your employees, granting them access to our employee self-service (ESS) portal, where they can review their pay statements, W-2’s and time off information using their smartphone, or other preferred devices.

Learn more about how we can help with payroll reconciliation or contact us today to start our collaboration.

Eric Jones
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