Contact
Free trial
HR news |

2 MIN

How to process payroll for new hires

process payroll
Alexandre Diard
process payroll

Compensating a new employee is a multilayered operation, consisting of activities that must be completed before, during, and after payroll processing. Since paying a new recruit is a complex business with various points to be respected, you must take great care when you gather the necessary information to process payroll of new hires.

Related articles:
What to do if you receive an IRS wage levy
The importance of knowing how to disconnect from work

Free trial

Before you process payroll

To begin the payroll process, check the following:

- Determine the new hire’s pay frequency, such as weekly, biweekly, semimonthly, or monthly. Make sure the payday frequency doesn’t run afoul of state law

- Verify that you have all the information needed to process the employee’s first paycheck, including direct deposit form, W-4 form for federal income tax withholding, and applicable state withholding form. If you use an integrated human resource (HR) and payroll solution, related information, including the employee’s Social Security Number, address, date of birth, and benefit deductions, should already be in the payroll system

- Gather the employee’s timecard information, if he or she is nonexempt, and check for accuracy. Submit the necessary preprocessing data to your payroll service provider if you outsource payroll

Free trial

During payroll processing

When preparing payroll, compensate employees according to their status:

- If employees are nonexempt, compensate them based on hours worked and ensure that compensation is not less than the federal or state minimum wage

- If employees are exempt, pay them at the agreed-upon salary

- If employees work under an employment contract, compensate them according to the terms of the agreement

Note that exempt-salaried new hires will not submit timecards, as they are not paid according to hours worked. Ordinarily, unless a permissible deduction applies, exempt-salaried employees should receive their full salary each payday. But, regarding the first week of employment, employers need only pay the exempt-salaried new hire for the number of days worked during that week.

Withhold taxes and deduct applicable benefits. Before closing out the payroll, run reports and double-check the new hire’s compensation.

Free trial

After you process payroll

When you finish processing payroll, ensure you complete the following:

- Record your payroll liabilities and expenses, including the new hire’s wages and withholdings payable, for the pay period in the general ledger

- Pay the new hire, whether by printed check or direct deposit, on the established payday. Give all new employees a paystub showing their gross wages, deductions, and net pay, even if this is not required by state law

- Submit the new hire’s withheld taxes to the Internal Revenue Service (IRS) and applicable state revenue agency, by the mandated deadline for your business

- Report the new employee’s wages and withholdings to the IRS (such as on your quarterly Form 941) and state revenue agency. Also, report wages to the state unemployment agency

- Give the new hire a Form W-2 by the required due date and be sure to file the form with the Social Security Administration

Although new hire reporting is essentially an HR function, it’s still part of payroll compliance, because it allows child support agencies to find delinquent child support payers and issue income withholding orders. 

 Free trial