The Library

Secure Payroll Procedures: Stewardship

At Southwestern Payroll, we take the responsibility that we have to our clients very seriously. Perhaps our most important responsibility is to be good stewards of each client’s information and funds. As a company, we have a long legacy of good stewardship and have put in place numerous policies and procedures to be sure we continue to protect our clients.


In order to process payrolls, we have to collect and maintain personal information for employees of our clients as well as potentially sensitive information about our clients themselves.

Employee information includes names, birthdates, social security numbers, addresses, bank accounts, health insurance elections, retirement plan elections, performance reviews, dependent information, child support orders, and much more. Company level information that we store includes FEINs, bank accounts, state tax account numbers, senior management contact information, and more.

Protecting electronic information

Much of the focus on information security centers on electronic access and protection. Increasingly, information is stored and available through web-based applications. Having proper internet security protocols in place and enforced is certainly critical. Proper network security to protect our network from infiltration is another critical step.

In addition to these protections, we have numerous other ways we protect client information. Delivery of payroll reports electronically is a great convenience for many. We offer several ways to deliver this information securely. They include encrypted emails, Secure FTP, and a secure file sharing system.

Securing paper documentation

Another critical facet of information security is controlling the paper documents in an organization. All paper archive documents are stored in secure areas protected by surveillance. Southwestern Payroll uses a secure onsite shredding service for all paper documents that do not need to be stored. Every piece of paper that has any text (excluding food waste) is shredded onsite before being secured and recycled. This ensures that sensitive information can’t be retrieved from our garbage.

Employee education and external review

Employees are educated about communications with unauthorized parties that might use social engineering to gain passwords or other relevant security information. Many sophisticated electronic attacks start with this type of low tech breach.

Each year we bring in outside auditors to review our procedures and policies to be sure we are keeping current with changing demands and technologies. Additionally, the physical security of our building is protected by audio and video surveillance at all times and by monitored alarms. Any entry to the building after hours is documented.

Our most important duties

Good financial stewardship is the other most important duty we have to our clients. As part of our processing, we collect funds from client bank accounts and escrow them until the funds need to be distributed to employees, tax authorities, or third parties.

In order to be sure we protect our clients and keep their funds safe, we maintain them in separate bank accounts by type of funds, never commingling them with our own operating funds.

Further, we reconcile all accounts containing client funds on a daily basis. This ensures that we collect all funds we expected to collect and that we paid all funds that we intended to pay.

All funds are safe and accounted for

Each dollar that we collect has an attendant liability associated with it. We track these liabilities by client and by fund type so that we know when we have paid and collected all funds due.

We can provide, on request, a detailed record of all client cash and outstanding liabilities to ensure that we have all funds needed to meet those liabilities. Our clients can rest assured that their funds are safe, accounted for and properly distributed.

Seeking the highest standards

We seek the highest standards for security and protection for our clients. From employee data to your payroll funds and information, we protect you.

Secure payroll procedures start the minute we begin collecting information about your company and your employees. Since 1955, we have held ourselves to a high standard of accountability. Our job is to serve our clients and protect their assets and information at every step of the payroll process.

Have questions about payroll? Give us a call: 918.587.3321

Our support team is standing by, or you can contact us online.

Bowl for Kids Sake with SWPay

Grab your bowling shoes!

The SWPay team will “Bowl For Kids Sake” supporting Big Brothers & Big Sisters at Andy B’s again this year.

Our team’s bowlers returning for this year’s event are: Megan Warren, Amy Slater, Steve Hobbs, Troy Petit, and Samantha Hartanovich.

The team has raised money for the event, and donations are still coming in.

Check out Bowl For Kids’ Sake here!

Last year, Amy had the high score for the first game due to her awesome smack talk, and Steve scored highest on the next. Will one of them score the title of “Best SWPay Bowler” this year?

Thank you, Andy B’s, for a fabulous time!

Garnishment Processing Service: The Right Way

Need help?

shutterstock_141127666Commercial garnishments, child support orders, tax levies, student loan payments and other wage attachments have become an increasingly difficult burden for employers to bear.

Incorrectly processing an order or failing to respond in a timely manner can expose the employer to significant financial risk and potentially damage relationships with employees.

Our Service Saves Time & Money

Southwestern Payroll Service has developed a garnishment administration service that alleviates all the hassle of managing this time consuming and complicated process.

And, we warranty that we will process them correctly, protecting our clients from unexpected costs.

When an order or other relevant information is received, our enrolled clients simply send us the document in a way that is convenient for them. We return a receipt so that the client knows we have received it and are taking responsibility.

Our clients are then provided with the form to notify their employee that the garnishment has been received.

After verifying the validity of the order, we contact the appropriate authority, file any appropriate responses, correctly calculate and withhold the deduction from the employee’s pay, remit the payment to the third party (state, attorney etc.) and file any subsequent paperwork.

In addition, we respond to termination orders and handle any employee terminations.

Most of our clients elect to pass most of the cost of this administration on to the employees through an additional payroll deduction. We set our fees to the proper statutory guidelines for each type; fees that employers are allowed to charge their employees for processing these orders.

Legal concerns

Increasingly, judges are routinely finding in favor of plaintiffs when a commercial garnishment order is not properly handled. This means that the employer can be found liable for the entire amount of the money owed by the employee even if the employee did not make enough to pay the garnishment.

Many families depend on the proper collection and distribution of child support funds to feed and clothe their children. Employees depend on their employer to keep them in compliance with these orders.

Let SWPay handle it.

Subscribing to our service ensures that your company will stay in compliance, avoid financial assessments and keep this important process running smoothly.

Find out more by contacting SWPay at 918-587-3321.

Employee Onboarding: Part 1

After the handshake

Onboarding employees
Once an employee has accepted a position with your company, you need to begin fulfilling the legal requirements of onboarding them.

What is onboarding?

Onboarding is the process of completing all necessary paperwork and putting everything in place for them to begin working for your company. It’s become the term of choice in many workplaces.

Properly onboarding an employee is an important responsibility of every employer. It goes well beyond a simple job application and resumé in a file.

Steps to proper onboarding

While there may be many necessary steps specific to your company or industry, (safety training, orientation, uniform fitting etc.), there are many steps that all employers should have in common.

The most well-known steps are completing a form W-4 and a form I-9. The W-4, also known as the Employee’s Withholding Allowance Certificate, instructs the employer on how to set up an employee in the payroll system.

If done properly, this ensures that the correct amount of federal income tax is withheld from each check according to the elections made by the employee.

The W-4 form is available here.

A copy of this completed form MUST be retained by the employer at all times and for all employees. Please be aware that you must follow the elections made by the employee. It is not the employer’s right or responsibility to advise the employee or override their elections. Failure to follow the withholding guidelines may subject your company to liability if the employee owes taxes at the end of the year.

The Form I-9, also known as the Employment Eligibility Verification, is now administered by the Department of Homeland Security through the U.S. Citizenship and Immigration Service (USCIS).

All employers are required to complete this form for all employees once they have accepted a position of employment. It lays out very specific instructions and acceptable forms of identification.

The I-9 form, along with the instructions, is available here.

Use Proper Forms

U.S. law requires companies to employ only individuals who may legally work in the United States.

To assist with this, the USCIS and the Social Security Administration have provided the e-verify service.

Once a Form I-9 has been received from an employee, the employer should complete the e-verification online to be sure that the name and SSN provided are match government records.

The process is quick and easy.

Information about the program is available here.

Important Information

Federal law prohibits discrimination in hiring resulting from your suspicion that an individual might not be eligible to work legally in the United States.

You should make your hiring decision before using e-verify. If e-verify does not immediately confirm eligibility to work, there will be clear instructions on how to resolve any discrepancies or tentative non-confirmations.

In the next article we will discuss new hire reporting and benefit eligibility.

Have questions about your payroll process?

Call 918.587.3321 for answers to your questions, or contact us here.

Online Payroll Process: Part 4

Small Business: Payroll Tax Services

One of the most important services we provide is the collection and payment of payroll taxes on behalf of our clients.

Funds are collected from our clients via ACH and deposited into our tax escrow account.

Four Major Tax Fund Categories

These include Federal taxes (income tax, social security and Medicare), Federal unemployment tax, State income tax withholding and state unemployment taxes.

Some cities and counties also have local taxes but this is much less common.

We track the taxes by deposit due date and make sure that all taxes are paid to the appropriate authority on time. We also file any necessary reports such as Federal form 941, 940 and W2s, State unemployment wage reports and many others.

Staying in compliance with payroll tax deposits and filings is critical to the long term health of any business. Being on our tax service also helps enforce good fiscal discipline by ensuring that all tax funds withheld from employees are secure and available when they are due.

Many businesses have found themselves in trouble because funds withheld from employees were used for other immediate cash flow needs and then were not available for deposit.

Our tax service is warranted and guaranteed to be done correctly. If a penalty is assessed due to a failure on our part, then we pay the penalty.

We also carry appropriate insurance to protect against significant errors or omissions. Generally notices from taxing authorities are easily resolved. Often they are generated in error or turn out to be mere requests for clarification.

For a more detailed explanation of the payroll tax process and responsibilities see this article

Audit and Reconciliation:

Southwestern Payroll takes our obligation to clients very seriously. We take great pride in our secure retention of all client funds.

One way we demonstrate this commitment is by the careful daily reconciliation of all our accounts and the reconciliation of all client funds by type. Each type of funds we collect is segregated in an appropriate account.

For example all funds collected are placed in an account that contains ONLY tax funds, direct deposits, direct checks or processing fees. Additionally, our own corporate operating funds are never co-mingled with client escrow funds.

Each year we hire an audit firm to conduct an SSAE-16 audit. While this audit actually looks at all phases of our operation to ensure security and protection of our clients, it focusses in great detail on the disposition of client funds.

We reconcile that all cash due from clients and all cash payable on behalf of clients is collected and paid. Copies of this audit are available on request.

Have questions about your payroll process?

Call 918.587.3321 for answers to your questions, or Get Free Info Here.

Check out the rest of our series:

Payroll Processing Cycle: Gathering Data
Payroll Processing Cycle: Input & Verification
Payroll Processing Cycle: Automated Processing

Online Payroll Process: Part 3

Automated Processing

Payroll Life CycleAfter a payroll is processed and the totals are verified post-processing can include the creation of output files that can’t be automated during processing, verification of all garnishment service data, and verifying any changes that were made to setup such as new bank accounts, general ledger or other file exports and many other items.

Disks with encrypted data, FTP uploads and many other custom processes may occur during this period. These checkpoints allow another opportunity for human intervention to be sure that all payroll data is correct.

Post processing also includes organizing the output into the appropriate categories. For example, some organizations have checks sent to a variety of locations and then reports to the corporate office.

Packaging and Shipping:

Although the adoption of paperless payroll is increasing, most companies still request that paper checks and reports be delivered to their offices or facilities. It is vital that instructions be followed exactly (and they can get complex), and that all information is delivered to the correct location in a timely manner.

For example a large restaurant chain with more than 50 locations needs checks shipped to each restaurant by a variety of shipping methods and delivered on the correct day.

At Southwestern, we use a custom shipping log to track the status of all payrolls and to record how and when it was processed for shipping.

ACH Processing:

After a payroll has been processed and verified, often electronic banking needs to be processed. This includes the collection of funds needed to pay employee direct deposits, company payroll tax deposits, and payroll processing fees.

We may also need to collect funds for any payroll or third party checks written on a client’s behalf out of our bank accounts. ACH processing also includes making payments to employees, third parties and some taxing authorities.

Southwestern Payroll uses strong controls and secure data transfer for all electronic banking.

In order for ACH transactions to be processed on time and to guarantee timely deposit into the destination account, they must be transmitted to the bank two business days prior to the intended settlement date.

This ACH processing deadline is the point from which we work backwards to determine when input must be received from our clients.

Transactions can be initiated one day in advance and still be received on time in most cases, but these deposits are never guaranteed.

When an ACH transaction fails due to incorrect data input, we receive notification from the bank. We track the receipt of funds back into our account and distribute these payments back to the appropriate party per our client’s instructions.

Have questions about your payroll process?

Call 918.587.3321 for answers to your questions, or Get Free Info Here.

Check out the rest of our series:

Payroll Processing Cycle: Gathering Data
Payroll Processing Cycle: Input & Verification
Payroll Processing Cycle: Payroll Taxes

Online Payroll Process: Part 2

Input and Verification

While time can be tracked many different ways, and through various systems, all relevant information, including every employee‘s time worked and any needs related to payroll, needs to be entered into the payroll system. Southwestern allows you several options here.

Input Payroll Information:

You may access our system in either PC or web-based form and enter the information at your convenience, or you can provide the data to one of our payroll specialists and they will enter it for you.

No matter who enters the data, you can still access the system to review and look up information as needed. We can even provide access for your CPA, or other service providers, so they can access information without having to go through you first.

Three business days before the desired pay date, payroll data should be sent to us for processing with control totals. For example, if pay day is Friday, data should be sent to us some time before close of business on Tuesday.

This allows us 24 hours to process the payroll and to transmit needed electronic banking files.

Payroll Pre-process Steps:

Once the data is entered, it is submitted to us for processing. If the data is sent to us and entered by our staff, we ask that it include totals to which we can balance after data entry is complete.

However, if the data was entered by the employer, then we ask for control totals to be transmitted via email or fax, in the form of a pre-process register. Unlike many systems, with us you know exactly what the result of your data entry will be before you submit it to us.

This report shows the gross to net calculation for every check in the payroll to be processed. We need the totals from this report so that, after processing, we can verify that we match exactly what was submitted.

We believe that this step, requiring human intervention, is one of the critical factors that separates us from our competition. It also acts as a double check that you intended to submit payroll and that we should be looking for an electronic submission. Once the totals are received, the payroll is ready for pre-processing by our operations department.

Pre-processing can include a variety of steps ranging from additional data entry, importing of third party or supplemental information, or changes in company or employee setup to meet the needs of a particular client.

Southwestern Payroll uses a log system to create alerts when payrolls require special pre-processing steps outside the normal processes. One example is setting up a new general ledger export to process with payroll.

Perhaps the most significant pre-process step is our garnishment administration service.

Other pre-processing steps include checking for validity of SSN formats and for the presence of addresses for all new employees. We also verify that the amount of direct deposits is in line with predetermined limits for each company.

Process Payroll Data and Verify:

When all pre-process steps are completed, the payroll is ready for processing by our production department. Submitted payrolls are processed and control totals are verified to be sure that all earnings deductions and taxes match what was submitted by our client.

During processing, several verifications take place that could cause a payroll process to be interrupted and placed on hold. These include looking for abnormally large check amounts and other data integrity checks.

If the post processing totals do not agree with the submitted control totals, then our operations department will contact the client to determine the cause of the discrepancy and to resolve as needed.

Processing payroll can also initiate a variety of automated communications that expedite receipt of information by interested parties. This can be electronic delivery of payroll reports, uploading of files to third party secure sites, or internal communications within our staff.

We go through a few more checks in post-processing, and you can choose to package your payroll in a variety of ways.

Have questions about your payroll process?

Call 918.587.3321 for answers to your questions, or Get Free Info Here.

Check out the rest of our series:

Payroll Processing Cycle: Gathering Data
Payroll Processing Cycle: Automated Processing
Payroll Processing Cycle: Payroll Tax Services

Online Payroll Process: Part 1

Gathering Data

Over the years, I have found that most employers are unaware of the many steps involved with properly processing a payroll.

If you are outsourcing your payroll to Southwestern Payroll, then you might like to learn about the processes, procedures, and controls that are in place when we process your payroll.

If you are not processing with us, then you should ask about these steps with your current provider. Each is critical to maintaining accurate records, as well as ensuring payroll is done correctly and according to your wishes.

Recruiting and Hiring Employees:

The payroll process starts long before data is sent to us to pay employees. It begins when you hire an employee.

Properly documenting employee data is critical so you are in compliance with all state and federal laws and so you can report all information required.

Time and Attendance Tracking:

Once you have properly documented an employee and put them to work, it is likely that you will need to track their time worked and their attendance in general. This can include tracking hours to specific tasks or just tracking how much paid time off they have coming.

Using an electronic system to do this brings great efficiency and provides excellent record keeping. We provide comprehensive web-based time and attendance systems that allow you to track time using computers, time clocks, bio-metric devices, smart phones, mobile devices, and other methods, separately or in combination.

Using an electronic time keeping system should also provide for electronic signatures of employees and supervisors, time card approval, and ultimately electronic feed into the payroll module.

Regardless of how the time is tracked, all employee demographic information, time worked, and all payroll-related information needs to be entered into the payroll system.

Southwestern provides great flexibility in this process.

While time can be tracked many different ways, and through various systems, all relevant information needs to be entered into the payroll system.

Southwestern allows you several options here, which we will cover in our next article.

Have questions about your payroll process?

Call 918.587.3321 for answers to your questions, or Get Free Info Here.

Check out the rest of our series:

Payroll Processing Cycle: Input and Verification
Payroll Processing Cycle: Automated Processing
Payroll Processing Cycle: Payroll Tax Services

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