Payroll Reporting: What to Include

What is a payroll report?

A payroll report is an analytics document with detailed information about an employee, department or team. A payroll report may include pay rates, time sheets, overtime data, taxes paid by the employee and employer, paid time off (PTO) and more. An employer can use the report to verify tax liabilities and company accounting data. This information is useful for filling out legally required payroll forms.

Modern-day payroll software helps users automatically generate reports, file payroll forms and more.

Types of payroll reports

Although the names of payroll reports can vary among payroll software platforms, here are the most common types of payroll reports:

Employee summaries

An employee summary is a concise report containing an employee’s personal data, such as their name, address, hire date, pay type (e.g., salary or hourly) and tax information.

Error reports (unpaid employees or missing deductions)

You can run an error report to see if any employees did not receive a paycheck or if a regular deduction was not processed. Payroll software may indicate the error with an asterisk or a separate report.

Liability reports

You can run a liability report to see employee wages and tax responsibilities for a particular pay period. However, it does not usually account for payroll service charges.

PTO reports

At many businesses, employees have a finite number of PTO hours or days they can take per year. Tracking PTO through payroll software and generating a report can help you determine how much time off an employee has left and if multiple employees have requested vacation time on the same dates.

Payroll details/previews

A payroll detail or preview provides a line-by-line view of an employee’s, department’s or team’s compensation history. This report can help you search for a particular transaction or pay stub discrepancy.

Payroll service charges

Usually, you can easily access payroll software charges under a dedicated tab on your payroll system’s dashboard. You can typically view these by line item or sort and filter them for various views.

Payroll summaries

Payroll summary reports include information about an individual employee, department or team. For example, you or your payroll administrator can enter a date range to see gross and net wages, tax withholdings and other deductions for a specific time period.

Payroll tax liability reports

You can run a payroll tax liability report to see if you’re withholding the appropriate amounts from employee wages, how much you’ve paid the IRS and how much you owe.

Retirement contributions

Employees can voluntarily contribute to a 401(k) plan or 403(b) retirement plan, and you can match their contributions. A retirement contribution report documents and segments such contributions.

Workers’ compensation reports

If you streamline workers’ compensation administration through payroll software, you can often run reports to calculate insurance premiums. Coverage rates vary by the cost of payroll. [It’s not just workers’ comp — see what other types of business insurance your company needs.]

What payroll forms do employers need to file?

Businesses are required to file federal, state and local government forms quarterly and annually. Payroll reports can give you up-to-date information for filling out these payroll forms and preparing for an IRS audit, workers’ compensation claim or state agency inquiry. Below are the forms employers must file. Much of the information needed relates to the payroll reports mentioned above.

Form 940, Employer’s Annual Federal Unemployment Tax Return 

Form 940 helps you declare and pay FUTA taxes in accordance with the Federal Unemployment Tax Act (FUTA). FUTA tax can go up to 6 percent on the first $7,000 in employee earnings, but you may pay less if you participate in state unemployment taxes. Payments for FUTA are due Jan. 31 of the following year.

Form 941, Employer’s Quarterly Federal Tax Return

Businesses file federal payroll taxes using Form 941, which includes the following information:

• Employee wages
• Federal income tax withholdings from employee wages
• Medicare and Social Security taxes (paid by employees)
• Medicare and Social Security taxes (paid by the employer)

Form 944, Employer’s Annual Federal Tax Return

Small businesses can request to file taxes annually (instead of quarterly) through the IRS. In that case, they’d use this form when filing their payroll taxes.

Form W-2, Wage and Tax Statement

Employees use a W-2 form to file their income taxes for the prior year. The form lists an employee’s annual gross wages, deductions and benefits. As the employer, you must complete this form and distribute it to your employees by Jan. 31 of the following year. For example, the W-2 for an employee’s 2024 taxes must be available to them by Jan. 31, 2025. You must also file a copy with federal, state and local governments.

Form W-3, Transmittal of Wage and Tax Statements

Form W-3 is a summary of your business’s wage and tax statements for a given year. A W-3 is sent to the Social Security Administration and is due by Jan. 31 of the following tax year.

Local payroll forms

States have their own rules for income tax that are charged at the city and county levels. Due dates vary from quarterly to annually. It’s best to check with your local government for current tax laws and deadlines.

State payroll forms

Each state has its own rules regarding income and unemployment taxes. Most states prefer that businesses pay income and unemployment taxes quarterly. There are different forms and deadlines for different states.

Importance of payroll reporting

There are many reasons it’s important to track your payroll data. These are the major ones:

Accurate tax management

As a business owner, you are responsible not only for paying your own taxes but also for withholding employee payroll taxes and providing your employees with accurate tax information. Automating your payroll with software and using payroll reports can help you keep all tax documents in one place for quick reference or changes. Moreover, in the event of an audit or tax deadline, you will have all of your documents organized and payroll reports to reference so you can settle with the IRS. [Check out our guide to small business taxes.]

Cash flow management

When you keep up with payroll data via analytics reports, you not only keep your business in check but also ensure you’re not underpaying or overpaying your employees and hurting your cash flow. Payroll software can accurately track hours worked, overtime, custom PTO policies, sick days, employee taxes and tax deductions. As described above, you can generate valuable reports containing this pertinent information.

Customizable analytics

Your business isn’t the same as its competitors, so why limit yourself to standard payroll reports? Payroll software can help you create custom reports to stay on top of business processes and employee issues that are unique to your company.

Employee turnover reports

Employee payroll data can help you monitor and address employee turnover. For example, a payroll report may show high turnover in a particular department, which could indicate a lack of employee engagement there. Conversely, low turnover might indicate a lack of skill building or ambition among your workforce. Identifying these trends can help you plan proactive solutions.

Employee appreciation

If you don’t track important employee milestones, lack of recognition could become a drain on company morale. You can set up payroll reports to compile birthdays, bonuses and pay increases. You can schedule these reports to be sent on a recurring basis so you’re always aware of significant events and can celebrate them accordingly. This proactive recognition can keep your employees engaged and make them feel like valued members of the team.

How to keep up with and manage payroll reports with payroll software

The best way to keep up with your payroll report management is to use payroll software to streamline the process. You may be overwhelmed by the many payroll software solutions on the market. The cost may also be a turnoff. However, putting off the transition to a modern payroll system will cost you more in frustration, time and money in the long run. 

When you choose a top payroll service, your business will be able to accomplish these tasks easily:

• Integrate attendance and payroll into one system
• Classify employees properly
• Automate time clocks for hourly employees and calculate overtime pay
• Fill out and submit forms electronically
• Submit accurate paychecks on time
• Prepare for a possible IRS audit
• Calculate taxes and deductions accurately
• Calculate PTO electronically 
• Streamline management approval of employees’ hours
• Ensure compliance with labor laws
• Update your onboarding and training processes
• Eliminate human error and missed deadlines
• Monitor your cash flow

Once your chosen payroll system is implemented, you can take advantage of the program’s native reports and customize your own. You can decide which analytics are tracked, how often they’re monitored, and when and how to receive reports.

If your business cannot buy payroll software right now, you can still take these steps to manage your payroll proactively without the help of digital payroll reports:

• Set reminders and mark your calendar so you never miss a payday or tax deadline.
• Prepare spreadsheets and forms well before the due dates in case you run into any issues.
• Seek professional help from an accountant when you have questions about compliance with labor laws or regulations.

Best payroll software for payroll reporting

If you’re ready to enlist payroll software to help with your payroll reporting needs, you’re in the right place. Here are a few of our picks for the best payroll software so you can stay on track with both payroll processing and your payroll reports. 

• OnPay: If you have unique payroll needs that require special reporting, OnPay has you covered with customizable report features. You can add over 50 different data points and arrange columns however you see fit. Read more in our OnPay payroll software review.
• Paycor: If you need advanced reporting features, Paycor is a great choice. This software is known for its sophisticated analytics features, including predictive analytics that can help you uncover issues such as rising employee turnover. Learn more in our Paycor review.
• ADP: From assistance with new-hire reporting to extensive payroll processing, ADP’s features are useful for businesses of all sizes. You also get access to payroll tax management services, as ADP handles all local, state and federal tax filings. Find out more in our ADP payroll software review.
• Gusto: The Gusto platform has report templates that you can customize for whichever metrics you want to track. The base plan includes full-service payroll, and the software can generate employee W-2 forms and other tax documents. Get the details in our Gusto payroll review.

Set yourself up for success with good payroll reporting practices

Payroll reports aren’t just necessary; they’re also advantageous. Whether you’re managing tax compliance and cash flow or simply keeping track of your staff’s work anniversaries, payroll reports have numerous benefits. 

It’s essential to understand which payroll reports and related forms are legally required of you so nothing slips through the cracks. Payroll software can be instrumental in simplifying your payroll reporting and form filing processes. When you find a payroll reporting workflow that works for your team, you can get back to focusing on the bottom line. 

Natalie Hamingson contributed to this report.