Loading historical wages

Wage history is defined as all wages paid during the current calendar year. This includes a detailed breakdown of earnings, deductions, and taxes. It is critical that all wages paid to active, inactive, and terminated employees in the current year are added to Check prior to an account being submitted for activation. This ensures wages are reported correctly, wages that are subject to taxes are not reset and employees W2 reflect accurately at the end of the year.

Caution - If you cannot gain access to an employer’s year-to-date history for the calendar year, do not proceed with activation steps. If wages are missing, this can lead to incorrect tax filing, tax notices, and penalties.

Most payroll vendors have reporting functionality that will allow for the generation of custom reports. This enables you to extract the required fields in an output that is easier to format and import into Check.

Historical wage reports should include:

Some common types of standard payroll historical reports that provide the required information are:

First, add the company’s closed payroll data. Check does not require you to enter per-payroll data for quarters that have been closed by the company. Instead, you may enter all payrolls for a closed quarter into one set of rows (1 per employee) in the uploaded file, which all have the same “Period Start”, “Period End”, and “Payday”. We automatically condense rows with the same dates into one payroll, so if you condense quarters, we’ll create one payroll in our system that represents the entire closed quarter.

This is standard practice during implementations and makes it easier to implement customers starting midway through the year. However, Check is happy to accept per-payroll data (without condensed quarters) if that works better for your workflow.

The downside of submitting closed quarters condensed into one payroll is that the “Audit Historical Payrolls” flow will unavoidably accumulate additional discrepancies between what Check calculates as the totals for each payroll and what the historical data tells us was calculated. In general, the only thing that will be computed correctly for condensed quarters are flat taxes like Social Security. All other taxes, benefits, and post-tax deduction contributions are expected to vary in calculation.

Finally, you need to obtain copies of all closed-quarter federal, state, and local returns. Quarterly payroll reports are usually available to employers between the 15th and end of the month following the close of the quarter.

After closed payroll has been entered, add any remaining open quarters’ payroll data. Check requires per-payroll data for all open business quarters. Check also requires per-payroll data for the most recent quarter if the company plans on going live in the first pay period of a new quarter.

Once all employees are added to Check, you can begin the process of loading historical data. First, convert the payroll historical data to a csv formatted file and proceed to the ‘Add Historical Payrolls’ section under Company Setup. Before you upload the file, review all earnings, deductions, benefits, and tax codes to ensure they exist in the company.

Next, you may choose to populate the downloadable Payroll Template located in the ‘Add Historical Payrolls’ section or directly upload and map a raw csv file. Select ‘Process’ to thoroughly review and ensure all columns are mapped correctly. Then select ‘Confirm Mapping’ and proceed to the ‘Review’ tab to verify employee mapping before submitting the file for audit.

In the ‘Audit Historical Payrolls’ section, starting with the first pay date of the year click on each pay date and review employees for any discrepancies. It is extremely important that pay dates are reviewed in chronological order to ensure wage base limits are calculated correctly. Variances can be caused by missing employee deductions, employee withholding mismatch, incorrect unemployment rate, or incorrect mapping. Make any applicable edits to the company, or employee setup and re-run the audit to ensure variances no longer exist or are valid. If edits are needed to the file, return to the ‘Historical Payrolls’ section, and select ‘Unsubmit’ to edit the file. Finally, check ‘Mark as reviewed’ once each pay date is audited.

Pro Tip:

If you know your client has a weekly pay frequency and the pay date falls on Fridays, consult a calendar and count the check dates to confirm you have collected all the pay dates. If you notice a discrepancy in the pattern, reach out to your client and ask about the gap in pay dates. This will avoid a delay in getting your account activated and potential corrections at the end of year.

Balancing can be very simple and require only a few moments of your time. After you have imported and processed the file you uploaded, run a payroll audit report and compare the results to the client wage documents from the prior payroll vendor. Verify the earning amounts, earning hours, benefits, post-tax deductions, employee taxes, and employer taxes match. If you have access to subject/taxable wages please compare those as well. The quarterly tax returns such as a federal form 941 and state quarterly returns are a great place to start as they provide quarterly totals.

Pro Tip:

For closed quarters, it is easier to balance by lumping, and loading wages using the last date of the quarter (03/31, 06/30, 09/30). For the current open quarter, you must load, and balance by pay date so federal liabilities can be reflected on Schedule B of federal form 941 by pay date.

Once all payroll historical data has been added, audited, and balanced, you can now proceed with confirming and submitting. This is an important step as the account cannot be submitted for review until this is completed. The ‘Confirm and Submit’ button is grayed out until all of the balancing steps are complete, and the Onboard Status is not in a ‘Blocking’ state. After Check activates the account, you will receive a Zendesk notification confirming account setup.

Important Terminology

When setting up a new company that has year-to-date information, you may come across a worker who was once paid as a contractor who is now being paid as an employee (or vice versa). Workers with both W-2 wages and contractor payments need to receive a W-2 and 1099 form. The following steps will ensure that historical information is properly classified for year-end tax reporting.