Payroll is a responsibility that employers shouldn't take lightly. There are many moving parts in the payroll process, from onboarding employees and recurring paychecks to taxes, deductions, and benefits.
Payroll reports can help you understand actual labor costs, budget for additional expenses, and stay compliant with federal, state and local agencies. While you can use paper records and simple software such as Excel, investing in a relationship with one of the best online payroll services can streamline the payroll process.
We'll guide you through the payroll report process, including the types of reports you should be running, how to generate them and which reports to file.
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What is a payroll report?
Employers use a payroll report to cross-reference financials and substantiate tax requirements. A payroll report lists essential information such as pay rates, hours worked, overtime, vacation time, tax withholdings and employer tax contributions.
Payroll reports offer a business a better understanding of its labor costs, helping it exert control over its budgets.
The importance of payroll reporting
Payroll reporting can offer up-to-date insights regarding your employees' work habits and the business's overall labor costs. In addition, payroll reports can be beneficial when working with an individual employee's pay record, tax preparation, and internal business or IRS audits.
Apart from crucial business insights, payroll reporting can also build morale. For example, keeping up with employee payroll changes and updates can help you calculate employee turnover; the insights you glean from payroll reports can then help you reduce turnover by setting up reminders to celebrate worker milestones, such as birthdays, bonuses and annual reviews.
When an employer attempts to run payroll manually, several human errors can occur. These errors include inaccurate paycheck amounts, not withholding enough tax or withholding too much, and failing to withhold deductions and benefits correctly.
With payroll software, the calculations are automatic. Payroll software's AI can also alert you to check your payroll data companywide when it sees an error.
Types of payroll reports to run
Depending on the payroll provider, the types of payroll reports may vary in name and what they encompass. However, the below reports are the most common between payroll providers.
Employee summaries
Having all of your employees' personal information in one place is critical for payroll accuracy and quick edits. Employee summaries include their name, address, date of hire, an indication of hourly or salary rate, and tax withholding.
Liability reports
Each pay period, an employer should know what money is going out for payroll. For example, a liability report can show total employee wages and companywide tax liabilities for a specific pay period.
Paid time off (PTO) reports
Running a PTO report on your entire workforce will show how many vacation days each employee has used and how many they have remaining for the year. Keeping track of this data can help an employer schedule employees appropriately and prevent labor shortages that can cause pinch points.
Payroll detail reports
Run payroll detail reports to show a history of each paycheck an employee has received. Use payroll detail reports to spot an error in pay or calculate taxes correctly, or provide them to the IRS if you're being audited.
Payroll preview reports
Like a payroll detail report, a payroll preview report gives a detailed, line-by-line account of an individual employee's earnings and withholdings.
Payroll service charge reports
When using a payroll service provider, run a payroll service charge report to see the status of relevant invoices.
Payroll summary report
Entering a date range can create a payroll summary report on an individual employee, a department or all workers companywide. A payroll summary report includes deductions, gross and net pay, and tax withholdings.
Payroll tax liability report
Payroll tax liability reports are essential for managing your business's cash flow. The reports show the following:
- Employee tax withholdings
- Employer tax contributions
- How much the employer still owes in payroll taxes (if any)
Retirement contribution reports
Retirement contribution reports list all 401(k), 403(b) or similar benefit plan payments. In addition, you can split reports into employer contributions and employee contributions. These reports may include additional information, such as vesting, if company rules apply.
Unpaid employees or deductions-not-taken reports
Employers use the unpaid employees report to ensure all of their active employees receive a paycheck. If an active employee shows $0, it's necessary to look into their account further and correct the error. The report will also show if a deduction was not processed correctly. A deductions-not-taken report can catch critical errors like insufficient taxes taken out for the employee. Not running this report could cause serious employee retention issues.
Workers' compensation report
When using payroll software, employers have the option to integrate payroll with workers' compensation. When combined, running a report will help the employer's insurance carrier calculate premiums. These reports can also be helpful during the workers' compensation claims process.
Workers' compensation payroll reports are beneficial if the employer has a specific budget for workers' compensation or would like to compare carrier rates.
Example of a payroll summary report
A payroll summary report states the name of the business and the date requested. It will also include the following payroll activity details:
Gross pay
The total wages the employer pays an employee, either in hours worked or a fixed salary amount. Gross pay can also include bonuses, commissions or tips.
Adjusted gross pay
Pretax payroll deductions subtracted from gross pay include retirement contributions, health insurance, short-term and long-term disability, life insurance, and flexible spending accounts (FSAs).
Net pay
Net pay is the amount an employee receives in their paycheck or via direct deposit. Net pay equals gross pay minus any taxes and deductions.
Employer taxes and contributions
Employer taxes and contributions include payroll contributions that the employer is responsible for, such as FICA, unemployment and other tax liabilities.