This article is part of a larger series on How to Do Payroll.
Payroll reports are documents based on your payroll data, showing specific information about your business relating to tax liabilities, pay rates, and other financial data. You can create a payroll report for nearly anything you want—assuming you have the data in place—for both internal usage as well as required IRS filings.
We’ll discuss the most important payroll reports, how to create them, and how your business will benefit from running them regularly.
Essential Payroll Reports
Creating payroll reports should be part of your regular small business payroll process. This will give you the information you need to file a form with a federal or state agency; it is also helpful for analyzing your payroll costs and process.
Payroll Register Report
A payroll register is a document your payroll team should regularly keep as it provides details on each employee’s net pay, deductions, tax withholdings, and gross pay for each pay period. To create the payroll register report, you need to have all of these details readily available. If you keep manual payroll records, you’ll need to compile this data into a spreadsheet to view in an easy-to-read format. If you use a payroll software, this is a standard report that can be run with a few clicks.
This report gives you the information needed to complete Form W-2 each year and is also great for conducting an internal payroll audit. It is also useful for your finance team or outside accountant or bookkeeper to reconcile your books and assign payroll costs accordingly.
Payroll Tax & Wage Summary
A payroll tax and wage summary report shows each employee’s taxable wages and the amount of tax paid per employee. This report differs from a payroll register report, which provides more detailed information on deductions and withholdings. A payroll tax and wage summary report comes in handy when filing your state and local taxes.
Creating this report is simple if you use payroll software. If you manually keep payroll records, you’ll need to gather the information for each employee and put it into a spreadsheet showing each employee’s wages and taxes paid for the period you’re reviewing.
Many states and cities require you to file taxes based on information contained in this report. Make sure you know how often you need to file taxes with your state and local agencies so you run the payroll tax and wage summary report on time.
Voluntary Payroll Reports
Not every payroll report is required for you to gather information for a federal or state agency. Sometimes, payroll reports are just good business practices, helping you see your company’s costs and ensuring you make smart business decisions with accurate information.
A payroll summary is a general report that shows you a high-level overview of your company’s payroll activity. Running this report regularly is one way to stay compliant with the Fair Labor Standards Act (FLSA), which requires employers to keep payroll records for at least three years. This report also comes in handy if you intend to apply for a business loan. Banks and lenders will require a payroll summary report to get a better picture of your employee-related overhead.
Creating a payroll summary report manually will take some time. You’ll need to gather all of the data below by looking through all of your employee’s records and putting the information in a single spreadsheet so you can view it all together. If you use payroll software, this is a standard report that you can access easily.
Payroll summary reports usually include:
- Employee name, hire date, and end date, if applicable
- Gross pay
- Adjusted gross pay
- Net pay
- Employer taxes and contributions
Cash Requirements Report
A cash requirements payroll report tells you how much money you need on hand—including total cash requirements—to cover payroll for the upcoming period. This report breaks down your total payroll costs for:
- Employee wages
- Benefits withholdings
- Any other deductions
Because a cash requirements report is useful for your business to know how much cash you need to cover payroll, make this part of your payroll process. If you’re doing payroll manually, create this report while you’re doing payroll so you can easily transfer data. Meanwhile, using payroll software will make generating this report much easier, and is something you can do immediately after you finish processing payroll. Some programs even provide this automatically when you’re done running payroll.
Benefits & Deductions Report
A benefits and deductions report shows you a breakdown of the benefits and deductions for each employee during each pay period. It includes the employee’s name, your company’s costs to supply benefits, any employee-paid portion of benefits, and any other non-tax deductions.
If you’re creating this report manually, this is another one to do while you’re doing payroll. Since you’re already listing this information for payroll, you can duplicate it in a spreadsheet so you can track your total cost to employ. Payroll software should include this as a standard report, making it easy for you to run as you see fit.
This report is important because it gives you insight into what it costs your company to provide benefits to your employees. While you shouldn’t make staffing decisions based on this report alone, this report shows you the total cost to your company to employ someone. Small businesses often find the details contained in a benefits and deductions report enlightening, and it should be run at least annually.
Employee Time Report
Employee time reports are used to see how many hours each employee worked during a pay period. If you use a time tracking or project management software, you may also be able to see what projects your employees spent their time on, allowing for even deeper cost analysis.
Many small businesses use an employee time report to manually enter payroll if they’re not using a fully integrated payroll system. Here are time sheet templates you can download and modify for use by your employees to track their hours worked. Your HR team can then use those time sheets to create an employee time report in preparation for payroll. If you use payroll software and enter employee hours or your software has time tracking built in, running this report is as simple as a few clicks.
An employee time report is also useful to determine if your workers are productive with their time. If projects aren’t being completed on time, for example, but someone is logging nearly 40 hours each week, you might need to have a conversation with them about their time management. In general, it’s a good idea to run an employee time report quarterly, but it can also be run whenever you suspect an issue.
Time Off Expense Report
It’s important that you know how much each benefit is costing your company. A time off expense report shows you what it costs to offer your employees paid time off (PTO). This is different from a time report, which just focuses on the number of hours worked.
Time off expense reports are great to use alongside other reports to give you a full picture of your company’s costs and should be used at least semi-annually.
To create a time off expense report manually, you’ll need to list out each employee’s name, their hourly rate, and total amount of time off they took during the time period you’re reviewing. This will give you data on how much it costs your company to give employees time off. If you use payroll software that tracks employee hours, you can run this report through the program dashboard.
How To Create a Payroll Report
1. Determine the Information Required
If you’re using payroll software, you’ll be able to select different standard reports or make custom selections about what information you want to include. You can leave out employees’ names and other identifying information, for example, if you’re doing an overall analysis. Eliminating information is key to keeping the report clean and digestible.
However, if you’re using a spreadsheet to create payroll reports, you’ll need to manually transfer the data. This process is ripe for errors and could result in inaccurate information, so take extra care to ensure you don’t make business decisions with bad data.
2. Choose the Time Range
When running a payroll report for an IRS or state filing, you’ll need to run it for the time period requested. If you’re filing your quarterly taxes, for example, you’ll need to run a report for just the quarter you’re filing.
Meanwhile, for internal usage, the time period is entirely up to you. For example, if you’re trying to figure out how much you’re spending on company-sponsored benefits, choose a time period that is long enough to show you accurate data. Using a time range that’s only a month long may not give you an accurate picture, especially if you’ve recently hired more employees or changed your benefits offering.
You don’t necessarily have to run every payroll report every time you run payroll. Running a payroll report to complete W-2 forms, for example, only needs to be done once per year. Other reports, like a cash requirements report, should be run every time and become part of your regular payroll process.
3. Analyze the Results
Upon completion of the payroll report, review the information. If you’re running a report to file your quarterly taxes, make sure the data looks accurate and double-check the time period. You don’t need to redo the report manually, but you’ll be able to tell if something looks off. It’s also a good idea to compare reports. For quarterly tax reports, compare it to last quarter and, if it’s substantially different, there might be an error.
If you’re running a report for analyzing your payroll expenses, review the information to gain insights about where your payroll spending is going. Running an end-of-year benefits report, for example, can show you how much your company spends on providing employee benefits, which can guide your decisions for the upcoming year.
Benefits of Payroll Reports
While few payroll reports are required, running different reports provides you with specific insights about the operations and trajectory of your business and makes it easier to stay compliant with federal and tax requirements. For example, with the information you’ll pull from your payroll software or from Excel spreadsheets, you can file a quarterly payroll report (for most employers, this is Form 941) more efficiently.
Another benefit of using payroll reports is to know where your company’s money is going. Are you overspending on benefits? Are your payroll costs exceeding your profits? Even if the information you see isn’t great, it’s much better to know and take action than be completely in the dark about your business expenses.
Running payroll reports also shows you the performance of your company over time. If your staff size has remained constant but your profits have increased, that’s a good sign that your employees are more productive and your company is effectively managing your overhead. Without reports like these to paint a picture of where your company has been, you won’t be able to get your company to the next level.
Running regular payroll reports not only gives you deep insights into your company’s operations, but it can also help you streamline federal and state filings. You can create these reports manually but using payroll software is the best way to ensure accuracy with payroll reporting, helping you effectively manage your business.