Question 1

What is payroll in simple terms?

Accepted Answer

Payroll is the process of calculating and distributing compensation to employees for hours worked, including wages, tax withholdings, benefits deductions and employer contributions. It is governed by the Fair Labor Standards Act (FLSA) at the federal level and by state wage-and-hour laws. Payroll is not just issuing paychecks; it includes the recordkeeping, tax filing and compliance obligations that come with every payment. For a deeper look at terminology, see payroll glossary.

Question 2

What does payroll include beyond employee paychecks?

Accepted Answer

Payroll includes gross wages, federal and state tax withholdings, Social Security and Medicare contributions (both employee and employer portions), benefits deductions (health insurance, retirement), garnishments, employer unemployment taxes, workers' compensation and recordkeeping. Many teams underestimate the post-payment obligations: filing quarterly returns (IRS Form 941), issuing W-2s, remitting state taxes and maintaining records that satisfy federal and state retention requirements.

Question 3

What is a payroll system and what does it do?

Accepted Answer

A payroll system is the combination of software, processes and controls that move employee time data through calculation, payment and filing. At a minimum, it collects hours worked, applies pay rules and deductions, calculates net pay, issues payments and generates tax filings. EasyClocking by WorkEasy Software connects the upstream time-capture layer to the payroll calculation layer, so approved hours, overtime, departments and pay codes flow into payroll without manual re-entry.

Question 4

What is the difference between a pay run and payroll?

Accepted Answer

A pay run is a single execution event: you process one batch of payments for one pay period. Payroll is the full system of records, rules and processes that supports every pay run, including tax tables, deduction configurations, compliance policies, recordkeeping and reporting. Think of payroll as the infrastructure and a pay run as one cycle through that infrastructure.

Question 5

What are the three stages of payroll processing?

Accepted Answer

The three stages are pre-payroll, payroll calculation and post-payroll. Pre-payroll covers collecting and verifying time data, updating employee records and confirming deduction changes. Payroll calculation applies gross pay, withholdings, deductions and net pay formulas. Post-payroll includes distributing payments, filing taxes, reconciling reports and archiving records. Most errors originate in the pre-payroll stage, where unverified or incomplete time data enters the pipeline. For a detailed walkthrough, see three-stage payroll processing framework.

Question 6

What are the basic steps in processing payroll?

Accepted Answer

A standard payroll cycle follows these steps: (1) collect and verify time and attendance data, (2) calculate gross pay including overtime and differentials, (3) apply deductions and withholdings, (4) calculate net pay, (5) issue payments via direct deposit or check, (6) file tax deposits and reports and archive records. Each step depends on the accuracy of the one before it. If time data is wrong at step one, every downstream calculation carries the error forward.

Question 7

What is the first task in preparing a payroll?

Accepted Answer

Collecting and approving verified time and attendance data. Before gross pay can be calculated, you need confirmed hours for every employee, including regular time, overtime, paid time off and any job or department allocations. This is where most payroll errors begin. When time data arrives unverified or requires manual cleanup, the entire cycle slows down. EasyClocking by WorkEasy Software surfaces missing punches, exceptions and rate mismatches before the pay period closes, so payroll receives clean, approved data. See making time data payroll-ready.

Question 8

What is a payroll workflow?

Accepted Answer

A payroll workflow is the documented sequence of tasks, approvals and handoffs that move time data from capture through payment and filing. A well-designed workflow assigns clear ownership at each stage: who reviews exceptions, who approves timesheets, who locks the pay period, who runs the calculation and who reconciles the output. EasyClocking by WorkEasy Software provides configurable approval chains and exception flags so each step has a defined owner and a visible status.

Question 9

How do companies handle payroll processing end to end?

Accepted Answer

Companies typically follow one of four models: in-house manual (spreadsheets and calculator), in-house automated (time tracking plus payroll software), fully outsourced (a payroll service bureau handles everything) or co-sourced through a PEO. Regardless of model, the quality of the time data input determines the accuracy of the output. Automated time capture reduces the reconciliation burden that makes end-of-period payroll painful. For a comparison of these models, see in-house vs. outsourced payroll models.

Question 10

What are the key responsibilities in payroll processing?

Accepted Answer

Payroll processing involves multiple roles. Department managers approve timesheets and verify hours. HR managers maintain employee records, pay rates, deduction elections and compliance policies. The payroll administrator runs calculations, validates output, issues payments and files taxes. Finance or accounting reconciles payroll against the general ledger. When these handoffs are informal or rely on email, errors multiply. Defining who owns each step, and giving them visibility into exceptions, is the difference between a clean pay run and a correction cycle.

Question 11

What is payroll-ready time data and why does it matter?

Accepted Answer

Payroll-ready time data is verified, approved and formatted for direct import into a payroll system, with no manual cleanup required. It includes confirmed clock-in and clock-out times, applied overtime rules, department or job allocations, approved exceptions and manager sign-off. When time data is not payroll-ready, someone has to reconcile it manually before every pay run. EasyClocking by WorkEasy Software is built around this standard: time data flows through approval workflows and exception review before it reaches payroll, so the handoff is clean.

Question 12

What are the two mandatory requirements when calculating payroll?

Accepted Answer

Two requirements are non-negotiable. First, verified hours worked, as required by the FLSA, which mandates that employers maintain accurate records of all hours worked by non-exempt employees. Second, accurate withholding calculations, governed by IRS Publication 15 (Circular E), which specifies how to compute federal income tax, Social Security and Medicare withholdings. If either requirement is wrong, the employer faces liability from both the employee side (underpayment) and the government side (incorrect tax remittance).

Question 13

How should employee time be recorded to avoid payroll errors?

Accepted Answer

Time should be captured at the point of work through a method that ties the punch to the person: biometric scan, GPS-verified mobile clock-in, badge tap at a controlled device or web punch with location restrictions. Each punch should flow into an approval workflow where managers review exceptions (missing punches, early departures, overtime thresholds) before the pay period closes. Automated rules for rounding, break deductions and overtime should apply consistently. The goal is that by the time payroll pulls the data, no manual edits are needed.

Question 14

What should be included in a payroll process checklist?

Accepted Answer

A strong checklist covers every stage. Pre-payroll: lock time data, review and resolve exceptions, confirm employee record changes (new hires, terminations, rate adjustments), update deduction elections and verify tax table currency. Calculation: run gross-to-net calculations, review the pre-check register for outliers and confirm overtime and differential accuracy. Post-payroll: release payments, file tax deposits by deadline, distribute pay stubs, reconcile the payroll register against the general ledger and archive records for audit retention.

Question 15

What records must employers keep to support a payroll audit?

Accepted Answer

The FLSA requires employers to retain payroll records for at least three years, including employee identification, hours worked each day, total hours each workweek, pay rate, total earnings and deductions. The IRS requires employment tax records to be kept for at least four years after the tax becomes due or is paid, whichever is later. An automated time capture system that logs every punch, edit, approval and sync creates an audit trail that is far more defensible than paper timesheets or spreadsheets.

Question 16

How does an automated time capture system create an audit trail?

Accepted Answer

An automated system logs every event: the original punch (with timestamp, device, location and identity method), any edits made by a manager (with the editor's identity, the original value and the new value), approval timestamps and payroll sync confirmations. EasyClocking by WorkEasy Software maintains this tamper-evident log so that if a wage dispute or DOL audit occurs, you can produce a complete, attributable record for every punch and every change. That level of traceability is difficult to replicate with manual processes.

Question 17

What do you need to be able to run payroll?

Accepted Answer

At minimum: a federal Employer Identification Number (EIN), state tax registration IDs for every state where you have employees, completed W-4 forms from each employee, verified time and attendance data for the pay period, a payroll calculation method (software or outsourced service) and a payment distribution method (direct deposit setup or check stock). Many teams underestimate the time data requirement. Without clean, approved hours, every other component stalls.

Question 18

What are the most common payroll processing errors and what causes them?

Accepted Answer

The most common errors include misclassified employees (exempt vs. non-exempt), incorrect overtime calculations, missed or duplicated deductions, late tax deposits and wrong hours entered. The root cause for most of these is upstream: time data that was incomplete, unapproved or manually re-keyed. When hours are typed into a spreadsheet or re-entered from paper timesheets, transposition errors and missed exceptions are inevitable. Automating the path from time capture to payroll import eliminates the re-entry step where most mistakes happen. See most common payroll errors and how to prevent them.

Question 19

How do you eliminate end-of-period payroll reconciliation?

Accepted Answer

You eliminate reconciliation by resolving exceptions continuously instead of batching them at period close. That means flagging missing punches, unapproved overtime, schedule deviations and rate mismatches in real time so managers address them daily, not the day before payroll runs. EasyClocking by WorkEasy Software surfaces these exceptions as they occur, so by the time the pay period closes, time data is already verified, approved and ready to flow into payroll. The goal is that the payroll administrator's job on processing day is confirmation, not correction.

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