A guide to accurate and comprehensive payroll reports

Summary

• Payroll reports are documents that provide companies with insights into their payroll activities and tax liabilities.

• While payroll reports are usually created for internal purposes, there are some mandatory tax and payroll-related forms that businesses need to submit to government agencies on a regular basis. 

• You can improve payroll reports by utilizing a dedicated time and attendance system that generates higher-quality wage and hour data.

Every month, companies run payroll to pay all of their employees’ wages. This process requires the collection of data, such as hours worked from timesheets, gross pay, net pay, tax withholdings, and so on. This information provides insight into the inner workings of a company and can be used to populate different types of payroll reports. 

Payroll reports are documents created by human resources teams to keep tabs on employee payroll data and a company’s tax liabilities. Depending on the type of payroll report used, these documents usually include information like pay rates, the number of hours worked, overtime logs, any withheld taxes, employer tax contributions, and the amount of paid time off (PTO) taken. 

The importance of payroll reports

From small businesses to larger corporations, keeping track of payroll records is important for maintaining a good relationship with your employees, keeping your business running smoothly, and remaining compliant with tax regulations. 

Payroll reports are great for:

• Improving employee retention – Payroll reports include information on employee turnover. Monitoring employee churn could help uncover some issues that are standing in the way of your employee engagement. If you are losing more staff from a particular department, you might want to take a closer look to see what might be standing in the way of higher employee retention. 

• Using data for employee recognition purposes – Payroll software can track milestones, such as when someone is due for a review, a bonus, or a pay increase. Ensuring that such milestones are recognized and rewarded goes a long way toward increasing employee engagement.

• Maintaining healthy cash flow – Through timesheet integrations with your payroll, your reports include hours worked, overtime consumed, PTO, and sick days taken. Tracking hours worked helps you avoid underpaying or overpaying your staff, ensuring well-budgeted labor costs.

• Managing taxes – Employers and business owners are responsible for paying company taxes as well as managing employee tax withholdings. Payroll reports help keep data better organized and ready for tax submissions and audits from the IRS. 

Types of payroll reports

Payroll reports differ depending on the information you want to collect, your payroll provider, and any customizations you make to the reports. Some of the most common types of payroll reports are:

Payroll summary report 

These reports contain payroll information about any individual employee, a department, or the company as a whole in a given date range or pay period. They include information such as net and gross wages, tax withholdings, and FICA tax deductions. 

Payroll detail report 

As the name suggests, this is a detailed report on a specific employee or department or the company’s pay history. The report shows every movement and activity separately.

Employee summary report

Also known as a pay stub report – this document contains an employee’s personal, pay, and tax information. Your employees should have access to all of their own summary reports.

Payroll tax liability report

These reports show all tax withholdings per employee, the amounts your company has paid to government agencies, and any pending amounts still owed to the government.

Retirement contributions 

These documents show all payments you have made to employee retirement plans. Such retirement plans include 401(k) and 403(b).

Paid time off (PTO) report

This report provides employers with an overview of all PTO an employee has taken within a calendar year and how much time off they have left. 

Mandatory government forms employers need to file

Payroll reports are internal documents and are rarely, if ever, submitted to external parties. An exception would be if a company is undergoing an audit by the IRS or a state entity or if a workers’ compensation claim is involved. 

There are, however, other kinds of forms employers must submit on a regular basis to local, state, and federal governments. Much of the information needed for these forms can be found in your internal payroll reports, saving you a lot of admin time.  

Some of the most common government tax reports and forms include: 

• Form 941 – An employer’s quarterly federal tax return that is used to report on federal payroll taxes and includes information like:

• • • Employees’ wages
    • Federal income tax withheld
    • Medicare taxes and Social Security tax deductions
    • Employer contributions to Medicare and Social Security taxes
• Form 940 – This is in relation to the annual federal unemployment tax return (FUTA tax). The FUTA tax is an amount that companies pay to contribute toward “unemployment compensation to workers who have lost their jobs.” The amount could be as much as 6% of the first $7,000 paid to every employee. 

• Form W-2 – A wage and tax statement that employees use to present total gross wage, tax deductions, and benefits. Employers must provide their employees with a copy of this form and present copies to federal, state, and local governments. 

• Form W-3 – This form is how businesses submit a summary of their wage and tax statements to the Social Security Administration. It accompanies Form W-2. Both are due by January 31 of the following tax year. 

• State payroll reports – These vary from state to state, particularly when it comes to the frequency of payments.

• Local payroll reports – In some states, taxes are charged at the city and county levels and have different due dates.

How to organize your payroll reporting process

Regardless of what type of internal payroll report you’re looking to adopt, there are four basic steps to help you get your process organized. 

1. Identify the type of report you need. Based on what insights you’re looking to obtain from your report, choose the most suitable payroll report. Once the report is chosen, identify what information you’ll need to collect to populate it.
2. Choose the frequency of reports. Unlike government reports, you are free to choose the time periods you’d like to report on. Quarterly reports might result in a lot of unnecessary work for your payroll team. You may decide that issuing annual payroll reports is enough to give you the insights you’re looking for while also avoiding unnecessary burnout.
3. Collect and input data. This step involves inputting the data you need into your payroll system. Workforce management solutions automate much of this process, making your life much easier while also reducing the possibility of human error. 
4. Analyze your reports. This involves double-checking your payroll reports to make sure the information you are presenting is accurate. Finally, you should make use of your report findings and the insights you have gained to improve your processes.

Accurate payroll reports start with accurate timekeeping

The first step to getting the most out of your payroll reports is making sure that the data presented in them is accurate. This starts by making sure that things like hours worked and overtime taken have been recorded correctly. 

Workforce.com’s time and attendance solution accurately stores employee information, like pay rates, hours worked, breaks taken, and overtime used. Synced with scheduling, you can track labor costs and hour variances in real-time, perfecting employee time before it reaches payroll. And when you are ready, you can quickly export all timesheets right to your payroll system, setting you up to create the best possible payroll reports for your business.

To find out more about how Workforce.com can help level up your payroll data, sign up for a demo here.