The Small Business Payroll Checklist for Every Pay Run

Payroll is the one bookkeeping task your team notices immediately when it goes wrong. A missed overtime hour or late tax deposit can damage trust and trigger penalties. A consistent checklist removes most of that risk.

Before each pay run

• Confirm hours and time off. Approve timesheets and PTO requests before the payroll cutoff, not after.
• Review changes. New hires, raises, address changes, and benefit elections should be entered before you preview payroll.
• Check classifications. Make sure employees and contractors are classified correctly. Contractors are paid outside of payroll and receive a 1099 instead of a W-2.

While running payroll

1. Preview the payroll register and compare total gross pay to the previous period.
2. Investigate any employee whose net pay moved more than you would expect.
3. Verify deductions for benefits, retirement contributions, and garnishments.
4. Confirm the funding account has enough cash to cover net pay and tax withholdings.

After payroll is approved

• Record the journal entry in your books, splitting wages, employer taxes, and liabilities into the right accounts.
• Make tax deposits on time. Federal deposit schedules depend on your payroll size, and states set their own rules.
• Save the payroll register for your records.

Quarterly and annual tasks

When	Task
Quarterly	File Form 941 and state payroll returns
Annually	File Form 940 for federal unemployment
By January 31	Send W-2s to employees and 1099-NEC forms to contractors

Signs it is time to outsource

If payroll takes more than an hour each cycle, you operate in more than one state, or you have received a penalty notice, handing payroll to a specialist usually pays for itself. Learn more about how we handle payroll for service businesses.