Simplify team payments with payroll tracking software

To record employee payroll, follow these five basic steps:

1. Create accounts. Acquire Employee Identification Numbers (EINs) for your employees and start collecting employee information. You can then register for accounts with the Electronic Federal Tax Payment System (EFTPS), state tax accounts, and more, depending on state and local laws.

2. Calculate deductions. Next, you’ll need to calculate deductions. Add up social security, medicare, and any federal or state withholding information and divide this number by the gross pay to determine what percentage will be taken out of each paycheck.

3. List expenses. Make sure your payroll records list expenses like gross wages, employer taxes, social security and Medicare taxes, and more. You can learn more about payroll expenses here.

4. List liabilities. Next, list the liabilities (or amounts owed), like benefits, workers’ compensation, wage garnishes, and more. You can learn more about how liabilities work and the differences in each state here.

5. Double-check your work. While you can calculate deductions and track expenses and liabilities manually, there are payroll apps that can ensure better accuracy. If a payroll provider is out of your price range, double (and even triple) check your work for inaccuracies.

Payroll trackers are software apps designed to streamline payroll by automating employee hours calculations, deductions, and other aspects of a business' payroll processes. Some payroll trackers also serve as timesheet and time tracking software to save employees, managers, and human resources teams considerable time and money.

In its simplest form, calculating accurate payroll comes down to the basic formula of gross pay minus gross deductions:

Net Pay = Gross Pay - Gross Deductions

Of course, to calculate each pay period, you’ll need to divide each employee’s salary by the number of pay periods in a year. For hourly employees, you’d just need to multiply the number of hours worked in a given pay period by each employee’s hourly rate.

While it might be easy to track payroll hours manually for a few employees or contractors, it can be more challenging to track employee payroll hours manually for a larger team as it invites the potential for costly payroll errors. Consider payroll software instead.