How to estimate a manual check
If your system is not available, yet you have a payroll to process, what options exist?
- Is your payroll simple or not-so-simple?
- Type of employee (salaried vs. hourly)
- How much payroll information is available (when you don't have access to the system).
- Whether you pay employees with direct deposit or paper checks
Simple payrolls have a low number of employees, pay is fairly predictable, and payroll information such as the number of exemptions and deductions are available. Another example of simple payrolls are payrolls that have only salaried employees.
Salaried employees are easy, you write their checks for the same amount as they would ordinarily receive.
For hourly employees, you can use a payroll calculator such as PayCity Payroll Calculator or ADP Calculator to estimate the amount of net pay. It should not be relied upon to calculate exact taxes, payroll or other financial data.
To use the calculator effectively, you will need information such as the number of dependents for withholding and the deductions and amounts normally withheld from the employee.
Once the system is back up you can Record a manual check
Not-so-simple payrolls may have many employees, employee net pay may not be consistent each payroll, and information such as rates, exemptions, and deductions are not readily available.
If deductions and withholding information for salaried employees change infrequently, you could write a payroll check for the amount the employee normally receives, then once the system is back up, you can Record a manual check
For hourly employees, you could use a payroll calculator that roughly estimates net pay and you could write a check and record it manually, knowing you may have to adjust the next payroll if you did not withhold (or withheld the wrong amount).
If you find you can't easily estimate net pay for hourly employees, you could issue a "payroll advance" from accounts payable (How to record an Advance Paycheck or Loan to Employee). This is NOT a payroll check, rather an estimate of the net pay. When the system is back up, you would process a payroll, and deduct the advances from employees. Using this option enters information in payroll and "catches up" the employee in payroll records and/or pays the employee the difference between what the system calculates less the amount of the advance. You may have to Setup an after-tax deduction if you do not already have a "loan" "miscellaneous" or "advance" deduction. You would have to decide which account to charge in accounts payable. The account you used in a/p should be the same account used in the payroll deduction setup.
Mary typically has $100 gross, and her net pay is $75 (the net is 75% of gross).
This payroll, Mary's gross is $200 instead of $100. You could calculate the estimated amount of net pay based on past history. In this case, you would multiply $200 by 75%, and write Mary an advance check for $150.
If you have enough lead time, and your bank receives ACH information via a bank website (as opposed to sending a file), you could send pay via direct deposit. If you don't have enough time, for whatever reason think paper checks are a better choice, as if you are issuing payroll advance, use paper checks instead of direct deposit. You may want to communicate with your bank and let your employees know if they won't be receiving a direct deposit. Paper hand-written checks should be a legal instrument, the bank should accept them.