How to Run Payroll [Checklist]

Processing payroll can be a daunting task, which is why many organizations choose to use payroll software and leave processing up to a payroll service. However, we know some of you are facing this uphill battle on your own––and we admire anyone who’s having to go it alone—which is why we’ve created a downloadable payroll checklist to make it just a little bit easier.

This payroll checklist isn’t perfect, but that’s because it can’t be; there are multiple factors like your location, your industry, and how you choose to pay employees that make it impossible to create one single checklist to cover all payroll requirements. But if you’re starting from zero, this will help you get the ball rolling.

What’s Included in This Payroll Checklist?

The payroll checklist below covers the preliminary requirements for setting up payroll in the United States, including:

It goes on to outline the main steps in processing payroll, which are:

What’s Not Included in This Payroll Checklist?

If processing payroll has a rule that’s important above all others, it’s keeping accurate and complete records. This is important because, in the case of a discrepancy, either due to a current or former employee receiving incorrect pay or a state or federal agency receiving incorrect taxes, the burden of proof is on the employer to prove everything was accurate. This payroll checklist doesn’t include these elements, but it’s nevertheless critical for employers to remain in compliance by:

Should I Try to Process Payroll by Myself?

That’s a tough question. On the one hand, a payroll service does cost money, and any money saved is money that can be reinvested in your organization or used for other important initiatives. However, another way to look at it is to think of accurate, timely pay for what it really is: perhaps the most important benefit that you as an employer provide to your employees. In fact, most Americans live paycheck to paycheck, meaning that it wouldn’t take more than a single lost paycheck to mean missing a payment for something important like a mortgage or rent payment.

Paying for payroll software and payroll processing does cost money, but that cost is also a guarantee that you are providing that ultimate benefit to your people accurately and on time. It’s also a way to minimize your own risk, as the responsibilities for withholding and paying taxes, overtime, and benefits premiums are often handled by the payroll provider, who should be insured.

If you’ve never considered paying for payroll software or processing, take a look at handling all your payroll concerns at once by using HR software that includes integrated payroll as an affordable option. Need a hint? BambooHR has integrated payroll as an optional add-on. We’d love to take the stress of processing payroll off your mind so you can focus on taking care of your people.

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Payroll Processing Checklist

Follow this step-by-step checklist to ensure you are processing payroll correctly.


***ALWAYS ensure you are keeping accurate records in case there is a discrepancy.***

Employers have the burden of proof if there is any dispute with employees or government agencies.


Prior to running payroll for the first time, you will need:

If you have completed these steps, you can skip to step 2.


Review your employee information prior to running payroll to ensure nothing new was forgotten and nothing has changed.

A world-class integration with automatic data syncs for faster, easier payroll.

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Calculate the correct amount of money each employee will receive before withholdings.


Calculate the amount of money you need to take out of each employee’s pay, ensuring pre-tax contributions are taken out before calculating taxes. Don’t forget to calculate any company-matched contributions to healthcare or retirement funds.


Before you cut paper checks or enter amounts for direct deposit, be sure to do a final pass to look for discrepancies and ensure that you are keeping your records updated.



Money withheld from employees’ pay must be deposited to the proper accounts for eventual payment to state, local, and federal taxes, or directly to retirement funds and benefits providers. Any company-matched contributions should be included along with these distributions.