7 Types of Payroll Reports and How to Make Them
by Ryan Lasker | Published on May 18, 2022
I won’t go so far as to proclaim payroll is poetry, though the alliteration makes it tempting. But your payroll costs say a lot about what type of business you run -- labor-intensive, high-skilled, the list goes on. The best way to tell your business’ payroll story is by creating neatly packaged payroll reports.
Overview: What is a payroll report?
Payroll reports are documents that summarize payroll data. Several types of payroll reports help business owners, lenders, and governments analyze payroll costs.
The IRS and most states require businesses to submit quarterly and annual payroll reports related solely to taxes. When you apply for a business loan, the lender will probably ask for a payroll report that details employee compensation. Employees -- and the Fair Labor Standards Act (FLSA) -- expect you to produce individual payroll reports with every paycheck, called a pay stub.
Payroll software solutions offer a slate of payroll reports that they generate on demand. Let’s take a look at the standard payroll reports that you’ll come across as a small business owner.
Types of payroll reports
How many payroll report types are there? To borrow a line from Lindsay Lohan’s character in Mean Girls, the limit does not exist.
Here is a rough grouping of the most common payroll report types.
1. Company-wide payroll reports
A payroll register gives an employer a bird’s-eye view of its payroll expenses. It breaks down compensation, deductions, and taxes into their smallest components. It’s the go-to report if you’re wondering how many hours all of your employees worked in the last pay period or how much your business incurred in Federal Insurance Contributions Act (FICA) taxes in the previous quarter.
Since payroll registers contain a plethora of information, it’s unlikely you’d want to share it in its entirety with a third party, such as a lender. Redact employees’ personal information before sending it outside your four walls.
Not all payroll solutions call company-wide payroll reports by the same name. Payroll journal is a common synonym for payroll register.
2. Employee-specific reports
Pay stubs, or employee earnings reports, detail compensation, taxes, and deductions for individual employees. Unlike a payroll register that shows every employee’s earnings, pay stubs go one by one, giving you a more granular view of your business’ payroll activities.
The FLSA requires that employees have access to their pay stubs. They help employees understand how their paychecks were calculated, and they’re often used to prove income when applying for leases and loans.
3. Employee time reports
How many hours did Dave get last week? How about Lila? Time to check your employee time report.
Small business owners use employee time reports to see how many hours their employees worked in a specified period. Depending on the report you create, it may list what the employee worked on while on the clock.
Manufacturing business owners should pull their employee time reports when calculating employee productivity payroll analytics. Comparing your employees’ working hours to the number of finished goods made over the same time reveals how productive your employees were.
4. Cash requirements reports
A cash requirements report tells business owners how much cash they need to process payroll. It explains how the money is split among direct deposit, taxes, and other deductions. Make checking this report part of your payroll management procedures.
5. Payroll tax reports
Payroll tax reports are the annual and quarterly payroll reports that business owners produce to communicate payroll liabilities and employee compensation to federal, state, and local governments.
The most common federal payroll tax reports are:
- Form 940: An annual report for Federal Unemployment Tax Act (FUTA) tax
- Form 941: A quarterly report for FICA taxes and federal income tax withholding
- Form W-2: An annual report for employee compensation and tax withholding
For every federal payroll tax report, there’s probably a state equivalent. Check with your state tax authority to make sure you don’t miss a state quarterly wage report.
6. Paycheck Protection Program (PPP) reports
Small businesses need to meet certain conditions to qualify for forgivable PPP loans. Payroll software solutions can automatically generate PPP reports containing the information you need to apply for the PPP loan and forgiveness.
PPP reports help business owners calculate their loan amount by looking at your payroll data from 2019 or 2020. When it’s time to apply for forgiveness, payroll software will create another report that shows how much you spent on payroll during the loan’s covered period of eight or 24 weeks.
7. Certified payroll reports
Contractors and subcontractors of government construction projects need to submit certified payroll reports weekly. Most governments have created blank forms for you to fill out and sign. The federal certified payroll report form is WH-347.
Follow the Department of Labor instructions closely when filling out a federal certified payroll report. Since payroll reporting compliance is paramount here, seek out an accountant’s help the first time you’re asked to submit a certified payroll report.
3 things to include in a payroll report
Amp up your payroll reports with these three pieces of information.
Data means more when there’s something to compare it to. Consider putting your data side by side with data from the same time last year or the previous period.
If you’ve ever looked at a public company’s audited financial statements, you’ll see at least two years’ worth of side-by-side data. The comparison makes it easier for potential investors to understand whether the company’s financial footing is getting stronger, weaker, or staying the same.
Comparative data helps when analyzing payroll expenses, too. You’re more likely to catch payroll errors when there’s a baseline to contrast with the new information, for example.
Budget-minded business owners -- and that should be all business owners -- should include year-to-date data in their payroll forms.
For example, many businesses generate quarterly company-wide payroll reports to chronicle payroll expenses. If I’m making a third-quarter payroll report, I’ll want to know how much I’ve spent on payroll since January. That way I can assess whether I’ll make it to December without busting my business budget.
Pay periods covered
At the top of every payroll form, make clear the pay periods you’re reporting. Instead of titling your payroll register report “Quarterly Payroll Report,” call it “Q1 2021 Payroll Report.”
How to create a payroll report
Payroll reports take on all different shapes and sizes. Here’s how best to organize your payroll report, whatever it may look like.
1. Identify the information needed
Start by identifying the information you need to share with a third party or analyze internally. When reporting to third parties, you don’t necessarily want to include more information than they’ve requested.
Say you’re applying for a business loan and need to furnish a payroll report to show your payroll costs from the previous four quarters. You wouldn’t want to submit a full payroll register since it’ll provide employee names, their contributions to retirement plans, and a host of other superfluous details. You’d be better off with a concise report that lists employee wages, employer taxes, and employer-paid fringe benefits.
2. Choose a time period
Unless you’re creating a payroll tax report using IRS forms, you get to choose what period the report covers.
For example, it might be better to create 12 monthly payroll reports instead of four quarterly reports for your lender. It gives you more breathing room to explain fluctuations in payroll costs.
3. Input payroll data
Now that it’s time to create the payroll report, let me introduce you to every accountant’s best friend, Microsoft Excel. Take a look at the Excel templates floating on the web for something that loosely resembles what you’re trying to build, and customize it to fit your needs.
4. Analyze the results
Once you’ve finished drafting the report, review your work for errors, and see what insights you can glean. Were your payroll expenses higher or lower than expected? Why?
If you’re making the report for a third party, ask yourself what narrative the report is telling. You want to be an expert on your company’s financial documents in case the lender or investor asks a probing question.
Build rapport with your payroll reports
Payroll reports help business owners better understand their companies’ employee compensation costs. There’s a lot to learn from breaking down payroll costs in different ways, so don’t skip out on the analysis step in creating payroll reports.
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