How to Run Payroll Manually

Running payroll is the process of paying employees net wages... Which are gross wages minus deductions.

Today, I'll outline the basic process of how to run payroll manually. Please consider this informational only and not professional advice.

To help demonstrate, let's say you have one employee who's rate is $20/hour and has worked exactly 40 hours for the week.

Calculating gross wages (wages before taxes) is simple.

Multiply the hourly rate times the number of hours. Gross pay = 20 x 40, or $800.00 toward their weekly paycheck.

So far so good.

The next step is to determine what taxes should be withheld from $800.00.

You can do this for free at PaycheckCity.

Here are their four basic steps:

• Enter your company name and address
• Add an employee’s name, home address, and wage info
• Run a payroll and see the tax results
• Print the employee’s check or earnings record

Simple enough?

As further help, you run payroll manually by knowing where someone works, where they live, how often they are paid, what they entered on their W-2, and the cumulative amount of taxes they have paid since January 1st.

Tax tables are ever-changing and must always be updated to stay compliant with the US, state, and local governments. Please keep in mind that PaycheckCity's tables are good, but their free service is for general information only as well.

Then, once a paper paycheck is handed to the employee you are still not done. Your next steps are to pay those withheld deductions plus your employer payroll taxes to each agency in full and on time.

In other words, payroll is only done when employees are fully paid and the agencies are fully paid.

To do it yourself, you have to be detail oriented, and strictly follow the current US, state, and local payroll tax laws.

But if you use modern software, the whole process reduces to one click of a button.