How to Run Payroll End to End: 5 Procedures for HR and Operations Teams | EasyClocking by WorkEasy Software

How to Standardize Time Capture for Payroll-Ready Inputs

intermediate · Varies; includes a full parallel test pay period

This procedure configures time collection rules so every hour worked flows into payroll as a clean, validated record. Execute it before the first pay period under a new workflow; it produces a time-capture configuration that eliminates manual cleanup at pay-run time.

1. Audit Existing Time Entry Methods
Prerequisites
- Defined pay period schedule (weekly, bi-weekly, semi-monthly, or monthly) documented and approved
- Employee roster with job classifications, FLSA status, and overtime rules confirmed
- Time-tracking platform (e.g., EasyClocking by WorkEasy Software) provisioned and accessible to all employees
- Written policy for rounding rules, break deductions, and remote vs. on-site capture methods
Identify every channel currently used to capture employee hours: mobile apps, wall-mounted time clocks, web portals, kiosks, supervisor-entered timesheets, and paper cards. For each channel, document whether it produces structured, system-validated records or unstructured data that requires manual reformatting before payroll import.
Flag any channel that lacks identity verification (such as shared-password web logins or unsigned paper cards) because these introduce buddy-punching risk and produce records that are difficult to defend in a dispute or audit. Record the number of employees using each channel and the volume of punches per period.
This audit gives you a clear picture of where time data is clean and where gaps exist. If you find channels producing unvalidated records, those are your highest-priority targets for the configuration steps that follow.
Expected outcome: A documented inventory of all active time entry channels, each classified as validated or unvalidated, with employee counts and punch volumes per channel.
2. Map Pay Rules to System Configuration
Enter your overtime thresholds, shift differentials, rounding rules, and break-deduction policies into the time-tracking platform so they apply automatically at the point of entry. For each employee classification (hourly non-exempt, salaried exempt, temporary, union), confirm the correct overtime multiplier (typically 1.5x after 40 hours under federal FLSA rules, though state rules may differ), any applicable daily overtime thresholds, and shift-differential triggers.
Configure break rules next. If your policy requires automatic meal-break deductions after a defined shift length, set the deduction trigger and duration. If employees must attest to break compliance, enable the attestation prompt at the clock or mobile app. EasyClocking by WorkEasy Software provides pre-built pay rule templates for common FLSA classifications, which reduces configuration time for this step.
Pitfall to avoid: If salaried-exempt employees are accidentally assigned hourly overtime rules, the system generates phantom overtime entries. Verify FLSA status for every employee before saving pay rule assignments.
Expected outcome: All overtime thresholds, shift differentials, rounding rules, and break-deduction policies are active in the platform and correctly mapped to each employee classification.
3. Assign Employee Profiles
Link each worker to their correct pay rule set, department or cost center, job code, and approving manager within the time-tracking platform. This assignment determines which rules apply to each punch, which manager receives approval requests, and how labor costs are allocated in downstream reports.
For multi-location or multi-project operations (common in construction, warehousing, and staffing), assign location and project codes at the employee or shift level so hours are captured with the cost allocation detail payroll needs. EasyClocking by WorkEasy Software allows you to map employees to multiple cost centers and job codes, so workers who move between sites or projects during a pay period are tracked accurately without manual reassignment.
Verify every assignment against the employee roster. A single misassignment (wrong overtime rule, wrong manager, wrong cost center) will propagate errors through every downstream procedure in this guide.
Expected outcome: Every active employee is linked to the correct pay rule set, cost center, job code, and approving manager, with assignments verified against the current roster.
4. Configure Validation Gates
Set required fields and real-time alerts that prevent incomplete or suspicious time records from entering the dataset unchecked. At minimum, configure the following gates:
- Required fields: Job code, location, and project (where applicable) must be selected at clock-in. Records missing these fields should be flagged and held for correction.
- Missing punch alerts: If an employee clocks in but does not clock out (or vice versa), the system should generate a missing-punch notification to both the employee and the approving manager within the same shift.
- Overlapping shift detection: If an employee has two overlapping clock-in records, flag both for review.
- Daily maximum hours: Set a threshold (for example, entries exceeding a defined daily maximum) that triggers a review alert rather than blocking the punch, since legitimate long shifts do occur on job sites and in warehouses.
These gates catch data-quality problems at the point of entry rather than at payroll close, when corrections are more expensive and more disruptive.
Expected outcome: Validation rules are active for required fields, missing punches, overlapping shifts, and daily maximum thresholds, with alerts routing to the correct managers.
5. Run a Parallel Test Period
Collect one full pay period of time data under the new configuration alongside your legacy method. Both systems should capture hours for the same employees over the same period. At pay-period close, compare the total regular hours, overtime hours, and gross-pay inputs from each system for every employee.
Discrepancies fall into three categories:
1. Rule misconfiguration: Overtime or rounding rules producing different totals than the legacy method. Investigate whether the new rule is correct and the legacy was wrong, or vice versa.
2. Missing data: Employees who appear in one system but not the other, typically because of incomplete profile assignments (step 3).
3. Validation-gate overreach: Legitimate punches being flagged or blocked by overly aggressive thresholds (step 4).
Document every discrepancy and its root cause. This parallel run is your safety net; skipping it is the most common cause of payroll errors on the first live run under a new configuration.
Expected outcome: A side-by-side comparison showing total hours, overtime, and gross-pay inputs from both systems for the full test period, with every discrepancy documented and root-caused.
6. Resolve Configuration Gaps
Correct every rule mismatch, missing employee assignment, and validation-gate issue surfaced by the parallel test. Work through the discrepancy log systematically:
- For rule misconfigurations, update the pay rule template and re-run the affected employee records through the corrected rule to confirm the output now matches expectations.
- For missing data, complete the employee profile assignments and verify the employee can successfully clock in and out on all assigned channels.
- For validation-gate overreach, adjust thresholds and re-test with the same edge cases that triggered false flags.
After corrections are applied, run a spot-check against a sample of the parallel-test records to confirm the fixes resolve the identified gaps. Do not proceed to go-live until every documented discrepancy is resolved or explicitly accepted and documented as a known limitation with a manual workaround.
Expected outcome: All discrepancies from the parallel test are resolved, with corrected rules, assignments, and thresholds verified through spot-check re-runs.
7. Publish the Finalized Time-Capture Policy
Distribute written instructions to every employee and manager confirming the following:
- Which time entry channels are authorized and how to use each one (biometric clock, mobile app, web portal)
- Entry deadlines for the pay period (when the last punch must be recorded)
- How to request a correction for a missed or incorrect punch, including the approval chain
- Escalation contacts if a manager is unresponsive or a system issue prevents clocking in
- Consequences of policy non-compliance (per your organization's HR policies)
Post the policy in the locations where employees work: break rooms, job-site trailers, warehouse bulletin boards, and within the time-tracking app itself. For organizations using the platform from EasyClocking by WorkEasy Software, the Announcements feature on the time clock display can surface the policy at clock-in so every worker sees it without requiring a separate communication channel.
This published policy is your defensibility document. In a dispute or audit, you need to demonstrate that employees knew the rules.
Expected outcome: A written, distributed time-capture policy accessible to all employees and managers, with confirmation of distribution method and date documented for audit purposes.

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How to Run the Pre-Payroll Approval Workflow

intermediate · 24-48 hours before payroll cutoff

This procedure collects manager sign-offs on all time records before a pay run is initiated, ensuring no unreviewed hours enter payroll. Execute it in the 24 to 48 hours before payroll cutoff every pay period; it produces a fully approved, locked time dataset.

1. Pull the Pending-Approval Report
Prerequisites
- Time capture standardization complete (Procedure 1 output: validated time records for the full pay period)
- Manager approval assignments configured in the time-tracking platform
- Payroll cutoff deadline communicated to all approving managers
- Escalation contact list for unresponsive managers established
Generate a list of all time records awaiting manager review as of 48 hours before payroll cutoff. This report should show each approving manager, the number of records pending their review, and any system-flagged exceptions (missing punches, overtime spikes, duplicate entries) within their queue.
Sort the report by manager to identify bottlenecks early. Managers with the largest queues or the most flagged exceptions need attention first, because their delays have the largest downstream impact on payroll timing.
If your time-tracking platform is EasyClocking by WorkEasy Software, this report is available as a pre-built dashboard view filtered by approval status and manager, so you do not need to build it manually each period. Pull the report at a consistent time each period (for example, 48 hours before cutoff every cycle) to establish a predictable rhythm that managers learn to expect.
Expected outcome: A pending-approval report listing every open time record by manager, with flagged exceptions highlighted and queue sizes visible.
2. Send Approval Reminder Notifications
Dispatch reminders to every manager with open approvals. Each reminder should include the payroll cutoff deadline, the number of records awaiting their review, and a direct link to their approval queue.
Use whatever channel reaches managers most reliably: email, in-app notification, SMS, or a combination. For field-heavy industries like construction and transportation, SMS or push notifications are more effective than email because supervisors on job sites or in vehicles check email less frequently.
The platform from EasyClocking by WorkEasy Software can send automated cutoff reminders on a schedule you define, which removes the manual step of composing and sending notifications each period. If you use automated reminders, verify the notification schedule is set correctly at the beginning of each quarter rather than assuming the configuration has not changed.
Send the first reminder at 48 hours before cutoff and a follow-up at 24 hours. Managers who have not acted after the second reminder are candidates for escalation in step 4.
Expected outcome: All managers with pending approvals have received at least one reminder notification with their record count, cutoff deadline, and a link to their approval queue.
3. Review Flagged Exceptions
Examine every record the system has auto-flagged during the pay period: missing punches, overtime spikes above the expected threshold, duplicate entries, and entries that failed validation gates. For each flagged record, determine whether the exception is a data-entry error requiring correction or a legitimate work event requiring only an explanation note.
Route correction requests to the responsible manager with specific instructions: what is flagged, why it was flagged, and what action is needed (add a missing punch, confirm overtime was authorized, delete a duplicate). Attach a deadline tied to the payroll cutoff.
Do not approve flagged records yourself unless your organization's policy explicitly grants the payroll administrator that authority. The goal of the approval workflow is manager accountability for the hours they supervise; bypassing that accountability to meet a deadline creates audit risk.
Expected outcome: Every flagged exception has been reviewed, routed to the correct manager with a correction request, and assigned a resolution deadline before cutoff.
4. Escalate Non-Responsive Approvals
For managers who have not approved their records within 24 hours of cutoff, escalate to their department head or HR Business Partner using the established escalation list. The escalation message should include the manager's name, the number of unapproved records, the cutoff deadline, and the consequence of missing it (records cannot enter payroll, affected employees may not be paid on time).
Document every escalation: who was contacted, when, and what the resolution was. This documentation protects the payroll team if a dispute arises about whether adequate notice was provided. If the escalation does not produce approval by cutoff, follow your organization's policy for handling unapproved records. Most organizations either defer payment to the next cycle (with employee notification) or process at the last approved rate with a correction in the next run.
Expected outcome: All non-responsive managers have been escalated to their department head or HR Business Partner, with escalation actions and resolutions documented.
5. Lock Approved Time Records
Once all records are approved or all escalations are resolved, lock the dataset in the time-tracking platform to prevent further edits. Locking serves two purposes: it creates a fixed snapshot of what was approved (your audit trail), and it prevents late changes from altering the data between approval and payroll import.
Confirm that the locked record count matches the total employee count for the period. If the numbers do not match, investigate before proceeding. Common causes of mismatches include employees added mid-period whose profiles were not fully configured, or terminated employees whose final-period records were not submitted for approval.
After locking, no manager or employee should be able to modify the dataset. Any corrections discovered after locking must go through a formal amendment process and will be reflected in the next pay period or in a supplemental run.
Expected outcome: The time dataset is locked, with the locked record count matching the expected employee count and no further edits possible.
6. Export the Locked Dataset
Generate the payroll-import file in the format required by your payroll calculation system. Depending on your integration, this may be a CSV file mapped to your payroll provider's import template, an API push to a connected payroll system, or a direct integration that transfers data automatically when the dataset is locked.
The platform from EasyClocking by WorkEasy Software supports over 20 payroll and HR system integrations, including direct API connections and file-based exports. Verify the export format and field mapping are correct before the first live export; a misconfigured field map (for example, swapping regular hours and overtime hours columns) will produce incorrect paychecks.
After export, confirm receipt in the payroll system. Check that the imported record count and total hours match the locked dataset. Any discrepancy between the export and the import must be resolved before you proceed to gross-to-net calculation.
Expected outcome: A payroll-import file has been generated from the locked dataset, imported into the payroll system, and confirmed to match the locked record count and total hours.

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How to Calculate Gross-to-Net Pay

advanced · Varies by workforce size and payroll complexity

This procedure transforms approved time and compensation data into each employee's net paycheck amount, withholding totals, and employer tax liabilities. Execute it immediately after the locked time dataset from Procedure 2 is confirmed in the payroll system.

1. Import the Approved Time Dataset
Prerequisites
- Locked, approved time dataset exported from the time-tracking platform (Procedure 2 output)
- Current employee compensation records (base rate, salary, commission, bonus) confirmed in the payroll system
- Active deduction schedules (benefits, garnishments, retirement contributions) verified for the period
- Federal, state, and local tax tables updated to the current tax year in the payroll system
Load the locked export file into the payroll calculation system. If the import was completed in Procedure 2 Step 6, verify that the data is staged and ready for calculation. Confirm the following before proceeding:
- The imported record count matches the approved total from Procedure 2.
- Total regular hours and overtime hours match the locked dataset.
- All required fields (employee ID, job code, cost center, hours by type) are populated without errors.
If your payroll system flags import warnings (unrecognized employee IDs, missing fields, format mismatches), resolve each warning before initiating the calculation. Processing with unresolved import warnings is the first link in a chain that ends with post-disbursement corrections.
For organizations where the payroll system pulls data automatically via API from EasyClocking by WorkEasy Software, this step is a verification checkpoint rather than a manual import. Confirm the sync completed and the record counts match.
Expected outcome: The approved time dataset is loaded in the payroll system with record counts, total hours, and required fields verified against the locked export.
2. Apply Compensation Rules
Run the payroll system's gross-pay calculation. For each employee, the system should multiply hours by the applicable rate, applying overtime multipliers (typically 1.5x for hours exceeding the defined weekly threshold under FLSA), shift differentials, and any bonus or commission triggers for the period.
After the calculation runs, spot-check a sample of employees from each classification:
- Hourly non-exempt employees: confirm regular hours, overtime hours, and the correct multiplier produced the expected gross.
- Salaried employees: confirm the correct per-period salary amount, adjusted for any unpaid leave or mid-period rate changes.
- Employees with shift differentials: confirm the differential rate was applied to the correct hours.
If your organization has union employees with negotiated pay rules, verify that the union rate tables are current and that the calculation engine applied the correct rate for each job classification and shift.
Expected outcome: Gross pay for every employee is calculated with overtime multipliers, shift differentials, and bonus triggers applied correctly, confirmed through sample verification.
3. Verify Pre-Tax Deductions
Confirm that pre-tax deductions are applied before taxable income is calculated for each employee. Pre-tax deductions typically include health insurance premiums, Flexible Spending Account (FSA) contributions, Health Savings Account (HSA) contributions, and traditional 401(k) or 403(b) deferrals.
Check the following for each deduction type:
- The deduction amount matches the employee's current election (verify against the benefits enrollment file).
- Employees who are ineligible for a deduction (new hires in a waiting period, terminated employees) do not have the deduction applied.
- Annual limits (IRS 401(k) contribution limits, FSA maximums) have not been exceeded. If an employee is approaching the annual cap, the system should automatically reduce or stop the deduction for the remainder of the year.
Pre-tax deduction errors have a compounding effect: they change taxable income, which changes withholding, which changes net pay. Catching them here prevents cascading corrections downstream.
Expected outcome: All pre-tax deductions are confirmed correct per current employee elections, with ineligible employees excluded and annual limits enforced.
4. Calculate Tax Withholdings
Run federal income tax withholding based on each employee's W-4 elections and the current IRS withholding tables. Calculate FICA contributions: Social Security (6.2% of wages up to the annual wage base) and Medicare (1.45% of all wages, plus the Additional Medicare Tax of 0.9% for wages exceeding the applicable threshold).
For state and local withholdings, confirm that each employee is assigned to the correct tax jurisdiction. Employees who work in multiple states during a pay period may require allocation of hours and wages by state. If your organization operates in states with local income taxes (such as certain jurisdictions in Ohio, Pennsylvania, or New York), verify that local withholding rates are current and applied to the correct employees.
After the withholding calculation, compare the total employer-side tax liability (employer FICA match, FUTA, state unemployment insurance) against the prior period. A significant change without a corresponding change in headcount or wages signals a potential configuration error.
Expected outcome: Federal, state, and local tax withholdings are calculated for every employee, with employer-side liabilities computed and compared against the prior period for reasonableness.
5. Apply Post-Tax Deductions
Subtract post-tax deductions from each employee's remaining gross after taxes. Post-tax deductions typically include wage garnishments (child support, tax levies, creditor garnishments), Roth 401(k) or Roth IRA contributions, union dues, and voluntary deductions such as charitable contributions or supplemental insurance premiums.
Garnishment processing requires particular attention:
- Verify the garnishment priority order. Federal tax levies generally take priority, followed by child support orders, then other garnishments. State law may modify this priority.
- Confirm that disposable earnings calculations comply with the Consumer Credit Protection Act limits (generally no more than 25% of disposable earnings for creditor garnishments, with different limits for child support).
- If an employee has multiple garnishments, confirm the system is applying them in the correct order and stopping when limits are reached.
After post-tax deductions are applied, the remaining amount is the employee's net pay.
Expected outcome: All post-tax deductions are applied in the correct priority order, with garnishment limits enforced and net pay calculated for every employee.
6. Generate the Preliminary Payroll Register
Produce a line-item register showing gross pay, each pre-tax deduction, taxable wages, each withholding amount, each post-tax deduction, and net pay for every employee. The register should also display employer-side costs (employer FICA match, FUTA, state unemployment insurance, employer benefit contributions) per employee and in total.
Review the register for obvious errors before running the formal variance analysis in the next step:
- Employees with $0 net pay (may be correct for garnishment-heavy situations, but must be verified).
- Negative net pay (indicates deductions exceed gross; requires immediate investigation).
- Employees with unusually high or low gross relative to their peers in the same classification.
This preliminary register is a working document. It becomes the final register only after variance exceptions are resolved in subsequent steps.
Expected outcome: A complete preliminary payroll register with gross, deductions, withholdings, and net pay for every employee, reviewed for zero-pay, negative-pay, and outlier entries.
7. Run the Variance Report
Compare this period's preliminary register to the prior period's final register. Flag any employee whose net pay has changed by more than your defined variance threshold (a common threshold is plus or minus 10%, though organizations with highly variable hours may use a wider band).
Categorize each variance:
1. Expected variances: Rate changes, new hires, terminations, benefit enrollment changes, or overtime fluctuations that were anticipated and documented.
2. Unexpected variances: Changes with no documented cause, which require investigation before the register can be finalized.
Unexpected variances are the most important output of this step. They catch errors that would otherwise reach employees' paychecks: misconfigured rates, duplicate deductions, tax table issues, and ghost employees (IDs receiving pay without corresponding time records). Skipping this comparison is the single most common cause of undetected payroll errors in organizations that otherwise have strong processes.
Expected outcome: A variance report comparing the current and prior period registers, with every flagged variance categorized as expected (with documentation) or unexpected (requiring investigation).
8. Resolve Variance Exceptions
Investigate and correct every unexpected variance before advancing to disbursement approval. For each flagged exception:
- Identify the root cause (rate error, deduction misconfiguration, hours discrepancy, tax jurisdiction change).
- Apply the correction in the payroll system.
- Document the resolution reason, who approved the correction, and the date.
After corrections are applied, regenerate the payroll register and confirm the corrected entries now fall within the expected variance band. If a correction changes the total tax liability, re-run the withholding calculation for the affected employees.
Once all exceptions are resolved, the preliminary register becomes the final payroll register. This is the document you will archive in Procedure 5 and the basis for tax deposits in Procedure 4. Mark it as final, note the date and the name of the person who approved it, and do not allow further modifications without a formal amendment process.
Expected outcome: All unexpected variance exceptions are resolved with documented root causes and corrections, and the payroll register is marked final with approval recorded.

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How to File Payroll Taxes and Submit Deposits

advanced · Varies by deposit schedule and number of jurisdictions

This procedure remits withheld employee taxes and employer contributions to federal, state, and local agencies on the correct schedule and in the correct format. Execute it within the deposit deadline window following every disbursement.

1. Extract the Tax Liability Summary
Prerequisites
- Verified payroll register from Procedure 3 with tax liability totals by jurisdiction
- Federal EIN and all active state/local tax account numbers on file
- Deposit schedule classification confirmed (monthly or semi-weekly depositor status per IRS lookback period)
- Electronic Federal Tax Payment System (EFTPS) enrollment active; state e-payment portals configured
Pull the per-jurisdiction tax liability report from the final payroll register, separating federal, state, and local amounts by tax type. At minimum, your summary should itemize:
- Federal: Employee income tax withheld, employee Social Security, employee Medicare, employer Social Security match, employer Medicare match, and FUTA liability.
- State: State income tax withheld (per state) and state unemployment insurance (SUI) by state.
- Local: Local income tax withheld by jurisdiction, if applicable.
Verify the summary totals against the final payroll register. Any discrepancy between the liability summary and the register must be resolved before deposits are submitted. A mismatched liability creates a deposit shortfall or overpayment, both of which generate penalties or require correction filings.
Expected outcome: A per-jurisdiction tax liability summary, itemized by tax type, with totals verified against the final payroll register.
2. Confirm Deposit Due Dates
Cross-reference each liability against the applicable deposit schedule and log the deadline for each remittance. Federal deposit deadlines depend on your depositor classification:
- Semi-weekly depositors: If payday falls on Wednesday, Thursday, or Friday, the deposit is due by the following Wednesday. If payday falls on Saturday, Sunday, Monday, or Tuesday, the deposit is due by the following Friday.
- Monthly depositors: The deposit for the entire month is due by the 15th of the following month.
State deposit schedules vary by jurisdiction and are often tied to the size of your tax liability. Check each state's revenue department website for the current schedule applicable to your account.
Log every deadline in a shared calendar or task system visible to the payroll team. Missing a deposit deadline triggers penalties regardless of how accurate your payroll calculations were. The IRS publishes deposit schedule rules in Publication 15 (Circular E), which is the definitive reference for federal deadlines.
Expected outcome: All deposit deadlines for the current pay period are logged by jurisdiction and tax type, with no ambiguity about the due date for each remittance.
3. Submit Federal Tax Deposits via EFTPS
Log into the Electronic Federal Tax Payment System (EFTPS) and initiate the deposit for federal income tax withheld plus the employee and employer shares of FICA. Select the correct tax form (Form 941 for most employers) and the correct tax period.
Confirm the payment date falls within your deposit window. EFTPS requires that payments be scheduled at least one business day in advance of the due date, so do not wait until the deadline day to initiate the payment.
After submitting, record the EFTPS confirmation number immediately. This confirmation number is your proof of timely deposit in the event of an IRS inquiry. Store it in the payroll audit file alongside the pay period end date and the deposit amount it covers.
If you discover an error in the deposit amount after submission, you can make an additional deposit for the shortfall. Overpayments can be applied to the next period or claimed on the quarterly return. Do not attempt to modify a submitted EFTPS payment; submit a correcting deposit instead.
Expected outcome: Federal tax deposits are submitted via EFTPS within the deposit window, with the confirmation number recorded in the payroll audit file.
4. Submit State and Local Deposits
Log into each applicable state revenue department's electronic payment portal and remit the corresponding state income tax withholding and state unemployment insurance amounts. For local jurisdictions that require separate deposits, submit those through the designated local portal or payment method.
Each state has its own portal, login credentials, and payment procedures. For organizations operating in multiple states, maintain a reference sheet listing each state's portal URL, account number, payment method, and the payroll team member responsible for each submission.
After each submission, record the confirmation number, deposit amount, jurisdiction, and pay period in the payroll audit file. State agencies audit deposits independently of the IRS, and producing confirmation numbers quickly during a state audit demonstrates operational control.
If your organization has employees in states you have not previously operated in, verify that you have registered for withholding and unemployment insurance in that state before the first deposit is due. Operating without registration creates both penalty exposure and employee-level withholding errors.
Expected outcome: All state and local tax deposits are submitted through the correct portals, with confirmation numbers recorded for each jurisdiction.
5. File Quarterly and Annual Returns
On the applicable schedule, file returns that reconcile deposits made during the quarter (or year) against liabilities reported:
- Form 941 (quarterly): Reconciles total wages, tips, and other compensation paid; total income tax withheld; total FICA (employee and employer); and deposits made. Due by the last day of the month following the quarter's end.
- Form 940 (annually): Reports FUTA tax liability and deposits. Due by January 31 of the following year (with an extension to February 10 if all deposits were made on time).
- State equivalents: File state withholding and unemployment returns on each state's required schedule.
Before filing, reconcile the return totals against your period-by-period deposit records. The return should account for every dollar deposited and every dollar of liability calculated. Discrepancies must be investigated and resolved before filing, because amending a filed return is more complex and audit-attracting than correcting before filing.
Expected outcome: Quarterly and annual returns are filed on time, with totals reconciled against period-by-period deposit records and no unresolved discrepancies.
6. Save Deposit Confirmation Numbers
Record every EFTPS and state portal confirmation number in the payroll audit file alongside the pay period it covers, the deposit amount, and the tax type. This seems like a simple bookkeeping step, but it is the single most important record for audit defensibility in tax deposit compliance.
Store confirmation numbers in a format that is searchable by pay period, jurisdiction, and tax type. If an IRS or state auditor asks for proof of deposit for a specific period, you should be able to produce the confirmation number within minutes, not hours.
Do not rely solely on the EFTPS or state portal's transaction history as your record. Portal interfaces change, access credentials expire, and historical records can become inaccessible. Maintain your own copy as part of the pay-period file you will assemble in Procedure 5.
Expected outcome: All deposit confirmation numbers are recorded in a searchable format within the payroll audit file, indexed by pay period, jurisdiction, and tax type.
7. Reconcile Deposits to the Payroll Register
Confirm that total deposits submitted (federal, state, and local combined) equal total tax liabilities on the final payroll register. Perform this reconciliation per jurisdiction:
- Federal deposits should equal federal income tax withheld plus total FICA (employee and employer shares) for the period.
- State deposits should equal state income tax withheld plus SUI for each state.
- Local deposits should equal local withholding for each jurisdiction.
Any gap between deposits and liabilities triggers an immediate investigation. Common causes include rounding differences (usually immaterial), deposits applied to the wrong tax period in the portal, or a missed jurisdiction deposit. Resolve the gap before the next pay run so it does not compound across periods.
This reconciliation is the final checkpoint before the pay period moves to record close in Procedure 5. A clean reconciliation here means your tax deposit obligations for the period are fully satisfied.
Expected outcome: Total deposits submitted match total tax liabilities on the payroll register for every jurisdiction, with any gaps identified, investigated, and resolved.

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How to Close the Pay-Period Record and Maintain Audit-Ready Payroll Files

intermediate · Within 5 business days of each pay run

This procedure finalizes, organizes, and retains all payroll documentation after disbursement and tax filing are complete. Execute it within five business days of each pay run; it produces a complete, retrievable pay-period file.

1. Assemble the Pay-Period File
Prerequisites
- Verified payroll register from Procedure 3 confirmed final (no pending corrections)
- All tax deposit confirmation numbers recorded (Procedure 4 output)
- Disbursement confirmations (direct deposit ACH confirmations or check register) on file
- Document retention policy specifying minimum retention periods by record type
Collect all documentation for the completed pay period into a single logical record. At minimum, the file should contain:
- The final payroll register (Procedure 3 output)
- The locked, approved time dataset (Procedure 2 output)
- Tax deposit confirmation numbers and receipts (Procedure 4 output)
- Disbursement confirmations (direct deposit ACH confirmations or check register)
- Exception-resolution documentation (variance investigation notes, correction approvals, escalation records)
- Any mid-period amendments (rate changes, new-hire additions, termination adjustments)
EasyClocking by WorkEasy Software's payroll records module can auto-assemble the time data and approval documentation portions of this file from the locked dataset and approval audit trail, reducing the manual collection effort for the first two items. You will still need to add the payroll register, deposit confirmations, and disbursement records from your payroll system.
Expected outcome: A single logical file containing all payroll documentation for the period, with no missing components.
2. Label and Index the File
Apply a consistent naming convention to the pay-period file and store it in your designated payroll records system. A reliable naming convention includes the pay period end date, entity name (if you operate multiple entities), and run number (to distinguish supplemental or correction runs from the primary run).
Example: 2025-01-17_CompanyName_Run01
Store the file with access controls that permit read access for authorized payroll and finance team members but prevent edits after the file is closed. If your records system supports version control, enable it so that any post-close access or modification is logged.
Inconsistent file naming is one of the most common causes of audit delays. When an auditor requests records for a specific period, searching through ad hoc folder structures and inconsistent names turns a simple retrieval into a multi-hour exercise. Enforce the naming standard from the first pay period and do not allow exceptions. EasyClocking by WorkEasy Software applies configurable retention labels to time data records automatically at period close, which provides one layer of consistent indexing for the time-capture portion of the file.
Expected outcome: The pay-period file is named according to the standard convention, stored in the designated system with access controls, and indexed for retrieval by date, entity, and run number.
3. Reconcile the General Ledger Entries
Post payroll journal entries to the general ledger. The standard entries include:
- Debit: Gross wages expense (by department or cost center), employer payroll tax expense, employer benefit contribution expense.
- Credit: Employee withholdings payable (federal, state, local taxes), employee deductions payable (benefits, garnishments), employer payroll taxes payable, net pay payable (or cash, if already disbursed).
After posting, confirm the payroll clearing account nets to zero. A non-zero clearing account balance means a posting error exists: either a debit or credit was missed, duplicated, or posted to the wrong account. Investigate and correct the posting before closing the period in the GL.
If your organization uses departmental or project-based cost allocation, verify that labor costs posted to each cost center match the time data captured in Procedure 1. Misallocated labor costs distort project profitability and departmental budget reports, and they compound if not caught at the period level.
Expected outcome: Payroll journal entries are posted to the GL, the payroll clearing account nets to zero, and labor cost allocations match the approved time data by cost center.
4. Run the Post-Run Audit Checklist
Verify the following items before declaring the pay period closed:
1. Headcount match: The number of employees on the payroll register matches the prior period's count, or all changes (new hires, terminations, transfers) are documented.
2. Total labor cost variance: Total gross payroll for the period is within the expected budget variance threshold. If it exceeds the threshold, the cause is documented (approved overtime, new hires, rate increases).
3. Zero or negative net pay: Every employee with a zero or negative net pay has a documented explanation (heavy garnishment, benefit catch-up, unpaid leave).
4. Benefit deduction reconciliation: Total benefit deductions on the register match the amounts your benefits administrator expects to remit to carriers.
5. Overtime compliance check: Overtime hours are within expected ranges and any unusual spikes are documented with manager approval.
This checklist is your internal control evidence. In an audit, the checklist demonstrates that you did not simply process payroll mechanically but reviewed it for reasonableness each period.
Expected outcome: All checklist items pass or have documented explanations for variances, providing internal control evidence for the period.
5. Issue Pay Stubs or Earnings Statements
Confirm that every employee has received or can access their itemized earnings statement for the period. State wage-statement laws vary significantly: some states require a physical or electronic pay stub at the time of each payment, while others require only that the information be made available upon request.
At minimum, each statement should show:
- Gross pay (regular and overtime hours and rates)
- Itemized deductions (pre-tax and post-tax, listed separately)
- Tax withholdings by type
- Net pay
- Year-to-date totals for gross pay, taxes, and deductions
For employees who access their records through the self-service portal from EasyClocking by WorkEasy Software, verify that the current period's time data (hours worked, punches, approvals) is visible alongside the pay stub information so employees can cross-reference their earnings against their recorded hours. This transparency is a practical measure that reduces pay-related inquiries and supports the fairness principle that workers should be able to verify their own records.
Expected outcome: Every employee has received or has access to an itemized earnings statement for the period, compliant with applicable state wage-statement requirements.
6. Archive and Set Retention Expiry
Apply the retention schedule to the closed pay-period file. At minimum, follow these federal retention requirements:
- IRS (tax records): Retain for at least four years after the date the tax becomes due or is paid, whichever is later.
- FLSA (payroll records): Retain for at least three years.
- FLSA (time records, wage rate tables, work schedules): Retain for at least two years.
State requirements may exceed federal minimums. Check each state where you have employees and apply the longest applicable retention period.
Flag the destruction date on the archived file so records are held for the legally required minimum and then purged systematically rather than accumulating indefinitely. Indefinite retention creates its own risk: more data to manage, more data exposed in a breach, and more data to produce in litigation discovery.
Confirm the archived file is stored in a location that is backed up, access-controlled, and retrievable within minutes. The goal is that if an audit notice, employee dispute, or legal inquiry arrives for any prior period, the complete pay-period file can be produced without reconstruction effort.
Expected outcome: The pay-period file is archived with the correct retention expiry date applied, stored in a backed-up and access-controlled location, and retrievable within minutes.

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How to Standardize Time Capture for Payroll-Ready Inputs

1. Audit Existing Time Entry Methods

2. Map Pay Rules to System Configuration

3. Assign Employee Profiles

4. Configure Validation Gates

5. Run a Parallel Test Period

6. Resolve Configuration Gaps

7. Publish the Finalized Time-Capture Policy

How to Run the Pre-Payroll Approval Workflow

1. Pull the Pending-Approval Report

2. Send Approval Reminder Notifications

3. Review Flagged Exceptions

4. Escalate Non-Responsive Approvals

5. Lock Approved Time Records

6. Export the Locked Dataset

How to Calculate Gross-to-Net Pay

1. Import the Approved Time Dataset

2. Apply Compensation Rules

3. Verify Pre-Tax Deductions

4. Calculate Tax Withholdings

5. Apply Post-Tax Deductions

6. Generate the Preliminary Payroll Register

7. Run the Variance Report

8. Resolve Variance Exceptions

How to File Payroll Taxes and Submit Deposits

1. Extract the Tax Liability Summary

2. Confirm Deposit Due Dates

3. Submit Federal Tax Deposits via EFTPS

4. Submit State and Local Deposits

5. File Quarterly and Annual Returns

6. Save Deposit Confirmation Numbers

7. Reconcile Deposits to the Payroll Register

How to Close the Pay-Period Record and Maintain Audit-Ready Payroll Files

1. Assemble the Pay-Period File

2. Label and Index the File

3. Reconcile the General Ledger Entries

4. Run the Post-Run Audit Checklist

5. Issue Pay Stubs or Earnings Statements

6. Archive and Set Retention Expiry

How These Procedures Connect

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