What is a Payroll Report? A Complete Guide for Employers

It’s that time of year again. Your desk is buried under a mountain of timesheets, tax forms are piling up, and payroll reports are looming. For small business owners, payroll reporting season can feel like a second job—one that comes with plenty of stress and zero fun.

Sound familiar? You're not alone. Most business owners spend nearly five hours per pay period just calculating, filing, and managing payroll. That's 21 days a year where you could be running your business instead.

Here's the good news: Homebase takes the pain out of payroll and replaces it with peace of mind. We handle the heavy lifting—from automatic calculations to tax filing—so those hours of number-crunching turn into minutes. No more stress about compliance, no more late nights double-checking math. 

In this guide, we'll walk you through everything you need to know about payroll reports. Whether you're new to the process or looking to make it more efficient, we've got you covered.

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What is a payroll report?

A payroll report is a detailed record of employee wages, taxes, deductions, and contributions for a specific pay period. It's the financial receipt that shows exactly where every dollar of your payroll budget goes.

Take Sarah's coffee shop, for example. Her payroll report breaks down how much each barista earned in gross pay, the taxes withheld, and employer contributions like unemployment insurance. It might also show deductions for benefits such as health insurance or retirement plans, providing a complete picture of her team's compensation.

No matter your business size or industry, a payroll report gives you a clear view of your most important expense: your team.

Types of payroll reports

Payroll reports come in different formats, and each serves a specific purpose. Think of them like different tools in your business management toolkit—some for zooming out, some for drilling down.

Company-specific payroll reports

These are custom payroll reports tailored to your business’s unique needs. Let's say you run a small construction company. Company-specific payroll reports give the flexibility to track labor costs by project, comparing how much you're spending on wages for a renovation versus a new construction build.

Depending on your company’s needs, you can create a payroll summary report or a payroll detail report.

Payroll summary reports

Summary reports are your big-picture overviews. They provide a snapshot of total payroll costs, including: 

• Gross pay for all employees
• Total deductions
• Net pay
• Employer contributions

Payroll summary reports are ideal for quick budgeting reviews and getting a rapid understanding of your labor expenses.

Payroll detail reports

These reports are your deep-dive documents. They break down payroll data by individual employee, showing:

• Hours worked
• Specific tax withholdings
• Detailed deductions
• Individual earnings

Auditors love these. Employees appreciate the transparency. And when someone asks, "Wait, what's this deduction?" you'll have the exact details at your fingertips.

Local payroll reports

Local payroll reports focus on city or municipal tax requirements. Many localities impose additional income taxes or require special reporting for payroll-related expenses, especially for businesses operating in urban areas. 

San Francisco, for example, used to have a Payroll Expense Tax, which was eliminated after Proposition F passed in 2021.

State payroll reports

State governments have their own set of payroll reporting requirements. These reports typically include: 

• State income tax withholdings
• Unemployment insurance contributions
• Workers’ compensation documentation
• Compliance with state-specific wage laws (think minimum wage or overtime regulations)

Depending on your state, you may need to submit payroll reports related to income taxes and state unemployment taxes. Make sure you check your state’s website for details to ensure compliance.

Federal payroll reports

Designed to meet federal compliance requirements, these payroll reports typically include data on federal income tax withholdings, Federal Insurance Contributions Act (FICA) taxes, and unemployment contributions. You often need to submit federal payroll reports every quarter or every year.

Examples of some payroll forms you’ll need to file include:

• Form W-4, Employee’s Withholding Certificate
• Form W-2, Wage and Tax Statement
• Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
• Form 941, Employer’s Quarterly Federal Tax Return

For more details on what each of these forms entails and how to file them, read our blog post on the 8 payroll forms you need to know. 

Why are payroll reports important?

Filing payroll reports might sound like boring paperwork. But for small business owners, they're your financial lifeline. Here’s why:

Compliance

Payroll regulations change by state, industry, and sometimes even city. One wrong step, and you could be facing penalties.

Here's a real-world example: While Alabama and Florida have pretty flexible payroll distribution rules, Arizona is strict. They require businesses to pay employees semi-monthly—specifically, at least two paydays per month, not more than 16 days apart. Miss this, and you're out of compliance.

Payroll reports ensure you're following the law, from quarterly tax filings to proper wage documentation. It's like having a legal shield for your business.

Financial accuracy

Labor costs are typically one of the largest expenses for small businesses. Payroll reports help you understand exactly where your money is going.

Running a restaurant? By regularly analyzing payroll reports, you can spot patterns like labor costs spiking during slow periods. Maybe you're overstaffed on Tuesday afternoons or scheduling too many employees during off-peak hours. These insights can help you adjust schedules and control costs.

Employee transparency  

Clear, detailed payroll reports do more than crunch numbers—they build relationships. When employees can see exactly how their pay is calculated, it fosters trust. 

By providing accurate pay stubs and detailed records, you’re reassuring your employees that they’re being compensated fairly and correctly. If an employee questions a deduction or overtime calculation, you've got detailed records to provide a transparent explanation. No more awkward conversations or frustrated team members.

Tax filing

Tax season doesn't have to be a nightmare. Regular payroll reports make the process smoother by keeping all your necessary data organized. 

When it's time to file federal, state, or local taxes, you'll have everything at your fingertips: total wages, tax withholdings, and employer contributions. No last-minute scrambling, no panic-induced errors. 

Auditing and recordkeeping

Audits happen. Whether it's the IRS or an internal review, payroll reports are your best defense. If your business faces a workers’ compensation audit, for example, payroll reports will provide the detailed wage information needed to verify premium calculations

Plus, maintaining payroll reports for the required duration (often 3–7 years, depending on state laws) ensures you’re always prepared for unexpected audits or employee record requests. Staying organized isn't just smart—it's mandatory.

Key components of a payroll report

Your payroll report is only as useful as the details it contains. Let's break down what goes into a comprehensive report, using real examples to see how each component works.

Gross pay

Gross pay is the total amount an employee earns during a pay period before any taxes or deductions. It includes regular wages, overtime pay, commissions, bonuses, and other forms of compensation.

Say you own a coffee shop and you’re running a payroll report for your full-time barista, Alex. 

If Alex works 40 regular hours at $15/hour and 5 overtime hours at $22.50/hour, their gross pay would be $600 (regular) + $112.50 (overtime) = $712.50

Net pay

Net pay, or take-home pay, is the amount your employees actually take home after all deductions. 

In the scenario above, Alex’s gross pay is $712.50. If you deduct $124.51 for taxes and $70 for deductions (detailed calculations below), their net pay is $712.50 - $124.51 - $70 = $517.99

Taxes withheld

These include federal, state, and local income taxes, as well as the employee’s share of FICA taxes (which include Social Security and Medicare taxes). The combined rate for FICA is 15.3%, shared between employers and employees. Specifically, Social Security is taxed at 6.2%, and Medicare is taxed at 1.45%.

For Alex, their share of FICA taxes will be $712.50 x 6.2% + $712.50 x 1.45% = $54.51. Let’s say the federal income tax is $50 and the state income tax is $20. Alex’s total taxes withheld amount is $54.51 + $50 + $20 = $124.51

Deductions

Deductions are amounts taken out for benefits, garnishments, or other contributions. Common deductions include:

• Health insurance premiums
• Retirement plan contributions (e.g., 401(k))
• Wage garnishments (e.g., child support or loan repayments)

If you pay $50 as a health insurance premium for Alex and they contribute $20 to their 401(k), the total amount of deductions recorded will be $70.

Employer contributions

Common employer contributions include your share of payroll taxes, unemployment insurance, and benefits. This is the amount you pay in addition to your employee’s gross pay and reflect your total payroll expenses.  

For Alex, you may contribute $54.51 in FICA taxes and $30 in unemployment insurance, making your total contributions $84.51.

Employee information

A payroll report includes essential details about each employee, such as:

• Name
• Social Security Number
• Job title
• Pay rate

This ensures all records are tied to the correct individuals.

Pay period

The payroll report should specify the timeframe it covers, such as “December 1–15, 2024.” Clear pay period information helps with tax filings, audits, and employee questions about specific payments.

How to generate a payroll report

You can create your payroll report manually, or you can use payroll software like Homebase to simplify the process. But first, let’s walk through the steps to help you do payroll yourself:

1. Gather employee data and time records. Start by collecting timecards, pay rates, bonuses, and other relevant data for the pay period (like overtime hours). Pro tip: Even with manual calculations, use spreadsheet software like Excel or Google Sheets to organize your data. 
2. Calculate gross pay, deductions, and net pay. Use your employees’ hourly rates or salaries to calculate their total earnings, including overtime or commissions. Subtract federal, state, and local taxes, as well as any benefits or garnishments to get their net pay.
3. Include employer tax contributions. Factor in your share of payroll taxes and other costs, like federal and state unemployment insurance or workers’ compensation premiums.
4. Review for accuracy. Double-check your math. One small error can spiral into hours of corrections or compliance issues.
5. Export or print the report for filing or sharing. If you’re using spreadsheet software to create payroll reports, there are options that allow you to export or print your report for filing, tax submissions, or employee review. 

Manual payroll might work when you're just starting out with a handful of employees. But let's be honest,as your business grows, so do the chances for errors. One missed calculation could mean:

• Unhappy employees
• Tax penalties
• Hours spent on corrections
• Compliance headaches

That’s why small businesses are switching to Homebase as their payroll tool. We help them handle the heavy lifting, freeing their time to execute other tasks.

How to run payroll with Homebase

Running payroll doesn't have to take a lot of time. Here's how Homebase makes it simple.

1. Set up your digital system.

No more manually tracking employee hours, calculating different pay rates, and figuring out overtime. All of that happensautomatically with Homebase.

Just enter your employee information and pay rates, set up your overtime rules and PTO policies, and connect your bank account for direct deposits. After this initial setup, the system takes care of the rest—tracking every clock-in, break, and overtime hour. 

2. Let the system track time.

Homebase’s automation doesn’t just stop after setup. As your employees clock in and out using the app, their hours are instantly recorded. The system even sends alerts before anyone hits overtime and automatically calculates different pay rates for different roles. 

3. Review and approve timesheets.

When it's time to run payroll, you'll find all your timesheet data already organized and ready for review. You can see exactly when employees clocked in, what breaks they took, and any overtime worked. 

Need to make an adjustment? Just click to edit. Once you're satisfied, approve the timesheets with a single click, and they're locked to prevent unauthorized changes.

4. Let Homebase handle calculations and compliance.

Here's where you really save time—and avoid costly mistakes. Homebase automatically calculates all wages, including overtime and different pay rates. It figures out the correct tax withholdings for each employee and ensures you're compliant with federal, state, and local labor laws. 

The system processes direct deposits, handles tax payments, and even takes care of year-end forms like W-2s and 1099s. Instead of worrying about tax deadlines or compliance updates, you can focus on running your business.

Best practices for payroll reporting

Smart payroll reporting isn't just about getting the numbers right,it's about creating a system that works for you and your team. Here are strategies that make payroll reporting smoother and more efficient:

Automate your payroll system.

Manual payroll processing increases the risks of errors, takes up valuable time, and can lead to costly mistakes. Most small business owners spend almost five hours calculating, filing, and managing payroll and taxes per pay period. That adds up to 21 days a year,time you could spend growing your business instead. 

The solution? Use Homebase to automate:

• Payroll calculations
• Tax filings
• Direct deposits
• Time tracking
• Compliance updates

Review reports regularly.

Make it a habit to audit your payroll reports. Regular reviews help you catch discrepancies early, spot unusual patterns, stay on top of changing regulations, and maintain accurate records.

Ensure data security.

Payroll reports contain highly sensitive information, from employees’ Social Security Numbers to bank account details. To best ensure your team’s data, use a secure payroll system that:

• Limits access to authorized personnel 
• Encrypts sensitive data
• Provides secure employee logins
• Maintains data privacy standards

Keep records organized.

The IRS requires you to keep payroll records for at least three years. Some states require even longer. Make sure you store payroll reports systematically, whether digitally or in physical files. This will also help you easily retrieve them for audits or employee requests later.

Stay updated on tax laws.

Payroll tax rates and requirements can change annually or even mid-year. You can either:

• Monitor IRS and state tax updates regularly 
• Subscribe to tax law newsletters
• Consult with tax professionals
• Use Homebase(we keep track of regulatory changes for you)

Communicate with employees.

Clear communication builds trust,so how do you communicate effectively? Some suggestions: 

• Provide employees with detailed pay stubs
• Explain deductions clearly
• Answer questions promptly
• Make payroll policies transparent

Keep track of important deadlines.

Missing payroll tax deadlines can result in fines or penalties. Use a calendar or a reminder app to keep track of key dates, including:

• Quarterly tax filing deadlines
• Year-end reporting documents
• State-specific due dates
• W-2 and 1099 submission deadlines

Wrap up payroll reports with ease.

Reporting payroll accurately helps your business maintain compliance, while giving you time to focus on the tasks you really care about. Even so, regularly reviewing payroll reports and staying updated on tax laws is a lot to handle. Instead, try automating your payroll process with the right tools, so you can handle payroll season with ease.

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FAQs

What does a payroll report include?

A payroll report provides a complete picture of your payroll finances. It shows gross pay, net pay, all taxes withheld, deductions taken out, and any employer contributions made. The report also includes essential employee details and covers a specific pay period. Think of it as your payroll story told through numbers.

What payroll report forms do employers need to file?

As an employer, you'll need to submit several key forms throughout the year. Some examples include:

• Form 941: Quarterly report of federal income tax, Social Security, and Medicare taxes withheld and paid.
• Form W-2: Annual wage and tax statement given to employees and filed with the IRS.
• Form 940: Annual report of federal unemployment tax (FUTA).
• State-specific forms: Such as state unemployment reports or local payroll tax filings.

These forms ensure employers meet federal, state, and local tax obligations.

How do I create a payroll report manually?

Creating a payroll report manually requires careful attention to detail. To start:

• Gather employee data: Names, pay rates, hours worked, and benefits information.
• Calculate earnings: Compute gross pay, including overtime if applicable.
• Determine taxes and deductions: Include federal, state, and local taxes, as well as employee benefits and garnishments.
• Include employer contributions: Add amounts for Social Security, Medicare, and unemployment insurance.
• Compile the data: Organize it into a clear and comprehensive report.
• Review and verify: Ensure the calculations and entries are accurate.

While manually creating a payroll report is possible, it's a time-consuming process that's prone to human error,which is why many businesses opt for payroll software instead.

What’s the difference between a payroll summary and a payroll tax report?

​​A payroll summary gives you the big picture of your payroll expenses. It shows total wages, taxes, and deductions for all employees during a specific period. A payroll tax report, on the other hand, focuses specifically on tax-related information. It details all tax withholdings and contributions, which is especially useful during tax season and for compliance purposes.

How long should payroll reports be kept?

The IRS recommends keeping payroll records for at least three years. However, some states and agencies may require longer retention periods. It's better to err on the side of caution and maintain thorough records. With digital payroll systems, storing records longer is easier than ever.

Can payroll reports help with budgeting?

Absolutely. Payroll reports are powerful budgeting tools because they give you detailed insights into one of your biggest expenses: labor costs. They help you track spending trends, plan for future hiring, and make informed decisions about scheduling and overtime. Regular reviews of these reports can help you spot opportunities to optimize your labor costs while maintaining quality service.

Do small businesses need payroll reports?

Yes, even the smallest businesses benefit from proper payroll reporting. Beyond just ensuring accurate payments, these reports help you maintain tax compliance, manage labor costs, and make informed business decisions. They're essential for everything from tax filing to applying for business loans. Plus, having organized payroll records makes it easier to scale your business as you grow.