It’s payday and the teachers and staff at your child care center are waiting for their paychecks. Since you use a computerized Daycare Payroll System, it’s generally a quick and simple task to calculate withholdings and print out the checks. But today, the computer is down—maybe the power went out or the hard drive crashed or for whatever reason you aren’t able to complete payroll in the manner you’re used to.
Your employees try to be patient, but they have bills to pay and they’d really like to get to the bank during their lunch break. You may be feeling a little anxious as you try to figure out a way to run your payroll without access to your computer.
Here’s a method to get your payroll done quickly, without stress to you or your staff. And, surprisingly, it’s a lot simpler than you would think.
First, take a deep breath and let it out slowly. Everyone will be paid on time. Don’t fret about the computer. You won’t need it right now.
You’re going to write the checks out by hand—either from your business check book or, if you use computer checks, it’s fine to write them out on the blank checks you would normally put in your printer.
Calculate Withholdings or Payroll Advance
It’s all well and good to write the checks by hand. The question is, how will you figure out the proper amounts to withhold for taxes? There are two options:
Option 1: Payroll Advance (no withholdings)
The quickest way to get checks done is to treat each check as an “advance”. A payroll advance is essentially a short-term loan you’re giving the employee until your computer is back up and you’re able to do the proper calculations. Since taxes are not taken out of an advance, you won’t have to deal with figuring out withholdings. Here’s how it works:
- Write the check for the approximate amount of their normal take home pay. It’s helpful if this is slightly less than their normal amount—keep reading to understand why.
- When your computer is back to working again, post the amount you gave them as an advance, rather than a regular paycheck.
- Lastly, calculate their paycheck in the normal way using your payroll software—which will determine the withholdings—and be sure to deduct enough to repay the advance. There needs to be a little left over (at least 1 cent) to actually issue the check. See the “how-to” video below.
Option #2 Figure Withholdings by Hand
Although it may sound intimidating, in most cases it’s not that hard to figure out how much to withhold for taxes on your own. That’s especially true if you only withhold the four most common taxes (steps 1-4 below). The earnings are usually the same as the employee’s gross pay (as long as you don’t have any pre-tax withholdings, like a 401k or certain types of insurance, etc.).
Note: When your computer is working again, be sure to record each check with the exact amounts you withheld—don’t use the computer calculations this time, since you figured them out by hand.