Payroll checklist for small businesses
Running payroll is where the business settles what it owes the people who work for it, on a fixed date, under rules that add penalties when you are late. Run badly, it creates expensive follow-up work: an off-cycle payment to make an underpaid employee whole, a penalty notice for a late tax deposit, and a payroll account that will not reconcile against the register at year-end.
This payroll checklist covers one complete pay run, from the pay period closing to employees paid, taxes remitted, and the run recorded in your books. It is written for the owner, office manager, or bookkeeper who runs payroll at a small business, and the managers who approve time for their teams.
Frequently asked questions
How many days before payday should you start the payroll run?
Start 4 to 5 business days before payday. Direct deposit files usually need submitting 2 to 4 business days ahead, and you want at least a day before that for timesheet approvals and the register review. Same-day options exist at extra cost, and leaning on them every period means the review step gets dropped.
Who should run payroll in a small business?
One named person runs it, usually the owner, office manager, or bookkeeper, and a second person reviews the register before submission. The reviewer matters more than the runner: pay rate typos and payroll fraud both get caught by a second person reading the register, and auditors expect that separation once you pass a handful of employees.
Do contractors belong in the payroll run?
No. Contractors are paid through accounts payable against invoices, without tax withholding, and misclassifying an employee as a contractor carries back taxes and penalties. Keep one list of who is an employee and who is a contractor, and when someone works set hours under your direction, raise the classification with your accountant.
What should you do when you find an error after payroll is submitted?
For an underpayment, run an off-cycle payment the same week rather than waiting for the next run. For an overpayment, agree the repayment in writing with the employee before deducting anything, since deduction rules vary by state. Log both in [your payroll software] so the year-end totals stay right.
Does payroll software remove the need for a checklist?
No. Software calculates gross to net and files taxes, but the run still depends on people: managers approving time, someone entering changes, a reviewer reading the register. Those handoffs are where payday errors start. Chaser runs the checklist in Slack each pay period and chases every owner, so approvals stop arriving an hour after the deadline.
