SG Financial Services

Creating financial order out of paperwork chaos

Reconcile payroll

Among the year end tasks is reconciling payroll.   Get the payroll reports from your payroll vendor.   Some payroll vendors generate a report for you that lists everything you need.   You may have to gather the information from others, using the quarterly and annual reports.   Prepare yourself a spreadsheet so that you have the reconciliation documented.   List wages from your accounting reports with breakdown of various wages if you want.  Tie that to the total wages on the W-3 if you can.   You won’t be able to tie it to the W-3 if there were non-taxable deductions such as health insurance.   So you will have to use other reports, such as the quarterly state reports.   Match the employer social security and medicare amounts to the W-3.   Match the FUTA amount to the 940.  Match state unemployment to the state  reports.  Here in NY, we have the NYS-45 and we need to add all 4 quarters to match.   Remember that your accounting reports may include payments that were not made by your payroll vendor, such as state interest assessment.

It is a bit more time consuming if your accounting reports are on the accrual basis.   You will have to adjust for those accruals at the end of the previous year and at the end of the current year.   I like to reconcile before I put in the year end payroll accruals so that I know I am reconciled then add the accrual in and make sure I am still reconciled.