Payroll reconciliation is the process by which you ensure that you have appropriately paid all your employees. Payroll reconciliations are usually performed every year or month.
Payroll reconciliations also ensure that you have made the correct tax deductions from your employees and contributions on their behalf. It will help you ascertain the state of other deductions as well such as health insurance and charitable donations.
The following are some tips to help you improve your end-year reconciliation so it is not a painful and cumbersome process.
Audit W2s and Balance Payroll Reports Consistently
Many payroll departments make the mistake of waiting till the end of the year to do all their payroll reconciliation. The problem is that there will be too much work to handle, and inefficiencies will arise, leading to mistakes in the reconciliation process.
Therefore, you should ensure that you audit W2s and balance payroll reports throughout the year so they don’t become severe issues during the end-year reconciliation process. You can use a pay stub creator to generate monthly pay stubs and proactively audit W2s. W2 auditing tools should be regularly updated, which is easy to do with a pay stub generator.
Another tool to utilize that will help with year-end payroll reconciliations is a payroll cycle report. You should scrutinize the reports before committing to the payroll to fix errors and inaccuracies before they have a chance to build up and become huge mistakes.
Payroll and Earnings Registers
Accuracy is essential during year-end payroll reconciliations. You should have your accountant double-check all the wages and salaries as a measure for accuracy.
The numbers from each of the payroll checks should match against payroll and earning registers. Doing so is one of the best ways to ensure you handle your payroll reconciliation efficiently.
The payroll transactions of the year should be equal to the value of all the payroll associated accounts. If they do, your payroll reconciliation at the end of the year should go smoothly.
Evaluate Your End Year Processes
If you want to improve anything, you have to analyze it, and the same goes for your end-year payroll processes. It will be a challenge to evaluate your payroll reconciliation processes immediately after completing a payroll reconciliation. However, it will be of great benefit to do so.
It is a great idea to meet with your payroll department and analyze your employee payroll processes. See what went well, what went wrong, and which area could use some changes.
You can identify critical metrics to judge your year-end payroll reconciliation process and use them to improve your performance. Some of the indicators include the duration of the process, the steps involved, and the number of errors.
Promote Employee Communication
Research shows that the majority of employees use payroll technology to evaluate any issues with their payroll. Though these technologies are efficient and beneficial to your business, they lack the human element.
Therefore, you should encourage your employees to interact with the payroll department. Not every aspect has to be done via the payroll portal. Your payroll department will better understand the issues that your employees face when it comes to payroll matters. When it is reconciliation time, they will know what to look for and where employees might have made mistakes.
When your employees have a great relationship with the payroll department, they will have an easier time communicating about their problems. The result will be fewer errors made and less work to do during year-end payroll reconciliation.
You should never wait until year-end payroll reconciliation to rectify the mistakes made throughout the year. The reconciliation process should be ongoing throughout the year. Follow the tips above and see most of your year-end payroll reconciliation process problems disappear.