July Balancing Checklist for Tax Reporting and Filing

July is the month for filing Q2 tax reports.  Also it’s crucial that all regular monthly payroll reporting, tax deposits, Third party sick payments, check reconciliations and PTO balances are verified by the last day of the month.  This will ensure both the monthly and quarterly reporting is a success.

In this series is a month-by month check list that can help make this job easier for you.  Monthly preparation will make the quarter-end problem-free and help you avoid penalties and interest!

Remember: taxable wages = gross - non-taxable earnings - pre-tax deductions + taxable benefits

Below is the checklist for July.  Watch for a new checklist to be released each month.

July / Quarterly Checklist

Register for OSI’s Users Conference to be held in the fall. 

The deadline for quarterly tax filing is July 30.  This includes Q2 reports/electronic files for:

  • Federal 941 (Federal Income Tax, Social Security, Medicare)
  • State Income Tax
  • State Unemployment Tax
  • State Health Insurance Tax
  • State Workers Comp Tax
  • State Disability Tax
  • State Work Force Tax
  • Local Income Tax

Audit Every Payroll - With each payroll that you process, make it your habit to print and review reports.  If you find any discrepancies, research and resolve immediately.

Balance payroll to:

Tax deposits
Review the tax reports to confirm the tax payments you make agree with the system-calculated taxes.  Don’t forget to verify the taxability amounts are correct by using the formula above.  It is always a good idea to run the reports from your payroll system for the entire year as well in the last month of the quarter to ensure amounts have not changed.

General ledger
Accounting should verify balances in the general ledger balance back to the liability accounts

Verify benefits were withheld for all employees. Pay special attention to new employees, and employees who have had benefits added/changed/stopped.

Confirm the correct number of employees was paid. This can be done by starting with the employee count from the previous payroll, add the number of new employees and subtract any terminated employees.  If you are using the check count to determine all employees are paid, take into consideration any special checks that were included in the payroll such as manuals, voids, retro pay, bonuses, etc.

Make sure total wages, overtime, taxes and benefits are in line with prior payroll; if not, determine why before your next payroll.  Reasons may include a monthly benefit was included in the current payroll or production was up therefore overtime was approved during this time, therefore overtime would be up.

Monthly Process & Reconciliations

Payroll tax deposits
Avoid penalties and interest by making your tax deposits on time.

New Hire Reporting
Submit new hire information to your state.  Make sure to file timely based on the states regulations and to use the appropriate file specifications for submission.

SSN Verifications
There are two internet verification options you can use to confirm that your employee names and SSNs match Social Security records.  This will save time at the end of the year when processing Form W-2’s, 1099’s, etc.


  • Tax deposits for month and year to date
  • General ledger balances for month and year to date
    Compare Tax Reports to your GL accounts to make sure they agree
  • Benefits
    Compare the month’s benefit totals to monthly statements from providers to make sure any new hires/terms are being handled correctly
  • Bank Reconciliation
    Each month, reconcile the payroll bank account.  Watch for unclaimed wages that may qualify as escheat monies.  Also watch for phantom employees or unusually high or duplicate amounts clearing the payroll bank account

Review and audit monthly and Year to date reports Quarterly Processes & Reconciliation for prior quarter

Taxable Wages = Gross - Nontax pay - Pretax Deductions + Taxable Benefits

Payroll deposits - confirm that all payroll account deposits for Q1 have been made

Third Party Sick Pay - if a TPS carrier has furnished payment information to you, enter benefits or manual checks so that taxable wages will be correct on Q1 reports.


  • General ledger
    Compare payroll reports to make sure that cash, accrued wages, taxes, deductions, and benefits match GL account totals or can be explained due to timing of payments, etc.
  • Benefits
    Reconcile benefit invoices with actual amounts paid to providers
  • Year to date reports—Run year to date reports to ensure the following taxable and withheld amounts are accurate.
    • Federal taxable and withheld
    • All state taxables and withheld
    • All local taxables and withheld

Now that your balancing is complete and any corrections made, you may begin the quarterly reporting process.

Continue to check back for more on balancing, reconciling and preparing for a smoother quarter and year end process.

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Accountant Diane Gephardt , Frick's Quality Meats Inc.

Optimum Solutions stays current with the latest tax and government requirements and keeps the client informed with frequent updates. They are a good source for keeping me abreast of laws.