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Bart_Mitchell
May 23, 2022
Question

My Payroll is Late?

  • May 23, 2022
  • 1 reply
  • 0 views

I've had this issue for years, and I have a decent work around. But... I would just like to fix it, if possible.

We do weekly payroll. Pay period ends on Sunday, and I process payroll the following Monday and have checks/direct deposit for my employees by the end of the day. The scheduled payroll I've created (and I've created multiple. They always have the same problem) is set so that the pay period ends that Sunday, with the check date the following Monday. I have selected the 'Weekly' schedule.

Now, here is the problem:
I get the warning "Your Payroll is Late. Do you want to pay all by check?" when I click "Continue".
Then I get a second warning when I try to send the direct deposits (my workers have a mix, some with DD, some paid by check), again telling me that my payroll is late.

When I look at the schedule in the payroll center, it always shows under the "status" column that I should be processing the payroll on the Wednesday <Before> the end of the schedule. Quickbooks seems to want me to tell the future and know how many hours my workers will put in on Thurs, Fri and the weekend if they are putting in overtime.

Does anyone have any idea how to convince Quickbooks that by processing the payroll the day after the end of the pay period is on time, and not 5 days late? The system I have does work.... it's just annoying to get scolded by a program every week. I've attached a screenshot from today 5/23/2022, showing the upcoming payroll for next week. It shows the next payroll ends on 5/29, but it shows up above with a check date of 5/27/2022.


Im using Quickbooks Enterprise Solutions 21.0 with full payroll option, but I've had this issue since 2019.

1 reply

BigRedConsulting
BigRedConsulting
May 23, 2022

RE: Now, here is the problem:
I get the warning "Your Payroll is Late. Do you want to pay all by check?" when I click "Continue".
Then I get a second warning when I try to send the direct deposits (my workers have a mix, some with DD, some paid by check), again telling me that my payroll is late.

 

Yes, this is because you need to complete your payroll and send the DD orders two banking days before the payroll date. Otherwise the employees will not get their money by the payroll date, because it takes two days to deliver the money. Creating DD orders that won't arrive in employee accounts by the payroll date that is non-compliant, a form of "holding" payroll - something you don't want to do.

 

A better practice is to pay about week in arrears, a week after the pay period end date. For example, if your pay period ends on Friday, Saturday, or Sunday, make your payroll date the following Friday. Then complete the payroll and send the DD orders by Wednesday  5pm PT - the cutoff point for a Friday payroll.

 

 

B
Bart_MitchellAuthor
May 23, 2022

But that doesn't make sense. You're saying I'm 'holding' payroll, but the way to fix it is to pay them a full week later. That would be 'holding' their pay for even longer.
It sounds like I'm paying them a full 3 days faster than someone who pays "about week in arrears".

BigRedConsulting
BigRedConsulting
May 23, 2022

It does make sense. Most big companies pay a week in arrears, so they have time to prepare the payroll and send the DD orders. They did this even before DD was popular so they'd have time to get the payroll right. In the bad old days they had to calculate each paycheck manually and post it to ledgers manually. Even for a larger small company, this could take days.

 

As an employer, you must communicate the pay period and payroll schedule to your employees. Usually this is part of the employee handbook. For your case, it'd be something like "The work week and the weekly pay period is from Monday - Sunday. Payroll is paid on the following Friday."  You could actually make it Wednesday, if you can reliably get the payroll done and sent on Monday before 5pm. But you have to get it done. Depending on how complicated your payroll is, that may be rather aggressive.

 

Once the pay period and related pay dates are communicated then you're expected to make payroll, at all cost, on each payroll date. The rule is the employees have to have their money on the payroll date, whether that be a paper check or a direct deposit arriving in their bank account.

 

There's nothing wrong with paying in arrears, at least up to a full week. Every employer I've worked for since college paid me on the Friday after the pay period ended.

 

What isn't compliant with the DOL is paying the employees late ("holding payroll") for any reason, compared to the payroll date communicated ahead of time. Allowances are made for unexpected issues, such as computer or power failures or bank screw-ups, but your internal processes should be set up so that you can regularly make payroll.  "I was sick or tired or too busy" aren't reasons to miss payroll.  "I don't have the money for a couple of days" is possibly the worst reason you could ever give your employees to be late.

 

Interestingly, you also aren't compliant if you give your employees their live paper paycheck early, before the payroll date, a check that is dated in the future, and you ask them to sit on it until payday.  I'm not sure what employer abuse that's designed to solve for, but it is a rule.

 

If you're open 7 days a week, you can technically set your payroll date on any day of the week you want. As long as its regular so the employees understand when they'll be paid and you're there to hand out paychecks. However, when DD is involved, then the payroll date has to be a banking day, so then weekends are out.

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