How to design a flowchart for employee pay

Written by grace ferguson
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How to design a flowchart for employee pay
A flowchart helps you stay on track of payroll processing duties. (Comstock Images/Comstock/Getty Images)

A payroll system enables payroll processing. Specifically, an employer cannot process its employee pay without a payroll system. The system can be manual, which requires payroll to be processed by hand; in-house computerised, which uses payroll software to process the payroll; or external, which outsources the payroll to a payroll service provider. Regardless of the system used, a flowchart for employee pay helps streamline payroll processing. The flowchart includes the tasks necessary to process the payroll from start to finish. The design of the chart depends on the payroll system, and the information can vary by employer.

Skill level:


  1. 1

    Create a flowchart for the manual system. You can use an office suite program or neatly draw the chart on blank paper. Create boxes and arrows, which show the sequence of beginning and ending tasks. Include the following: gather time cards from employees/departments, collect employee change forms, verify time card hours (if applicable), manually calculate hours worked, manually determine wages due, manually calculate deductions and manually process paychecks.

  2. 2

    Design a flowchart for the in-house computerised system. Include the following: enter employee payroll changes (such as wage and W-4 adjustments), import timekeeping data into payroll software, investigate missing or erroneous time card scans, make time card adjustments, process payroll via software, print pre-processing report, double-check payroll, make necessary payroll changes, print paychecks and pay stubs, generate direct deposit file, forward deposit file to the bank and verify the receipt of the direct deposit file with the bank.

  3. 3

    Make a flowchart for the external system. Most providers allow you to upload your payroll hours via the Internet, or send them by e-mail or fax. Your flowchart data depend on your transmittal method. You may include the following: review employee hours, gather employee change forms, forward hours and pay adjustments to payroll supplier, receive paychecks/pay stubs from the supplier and double-check payroll received from the supplier. The final step is especially important because the Internal Revenue Service penalises the employer for payroll tax errors a third party makes.

Tips and warnings

  • The flowchart can also include check distribution information, such as which supervisors should receive paychecks for their respective departments.
  • You may include filing procedures, such as filing hard copies of the payroll register, particularly for the manual system.
  • The in-house computerised system stores payroll data in the software. Furthermore, many payroll service providers allow the employer online access to payroll reports. The employer can print reports as needed.
  • You can include payroll deposit information, such as deposits of employee funds and payroll taxes in the bank.

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