Note: This article applies only to the Plane's Unified Payroll and HRIS release.
This article covers all implementation steps required to get set up for US payroll, whether you are running payroll for W-2 employees for the first time or transitioning from another payroll provider.
How long does it take to get set up?
If you are running payroll for the first time or are transitioning from another payroll provider at the start of the year, getting set up takes a few business days to a week.
If you are transitioning mid-year from another payroll provider, getting set up takes 1-2 weeks.
Important: You’ll need to complete your setup before your first payroll starts to process, which is typically 4 business days before your first pay date.
How far in advance should you plan for your first payroll on Plane?
Let’s say you want to pay your employees on a Friday. With 4-day processing, you’ll want everything to be set up on Monday of that week, assuming no bank holidays. Then backward schedule from this day using the guidance above, and give yourself a few extra days if you can.
What if you only need to add contractors to payroll?
Plane's Unified Payroll supports W-2 employees; international employees (using our EOR features); and US and international contractors. You can add contractors in minutes, because no tax or filing authorizations are required. Please see the Contractor Payroll section at the end of this article for more information.
The steps to implement US payroll are shown in the flowchart below:
1. Plane will enable access to US Payroll and Unified Payroll and HRIS features.
Note: If you were using the original features for recurring contractor payments, you’ll transition to the new Unified Payroll experience. Any scheduled payments will continue to be processed through the original experience, but future pay periods will be visible in the new experience.
2. Set up pay schedules
When planning for your first payroll, you probably put some thought into what pay schedule(s) you want to adopt. If you are transitioning from another payroll provider, you may decide to keep what you’ve had in place, but you may want to consider a change.
You’ll need to decide on the following:
Pay frequency: weekly, every other week, twice per month, or monthly
Pay date: When payments land in the employees' bank accounts
Pay period: The time period associated with the pay
If you want payroll to be approved automatically
The most common pay schedules for salaried employees are:
Twice per month, with paydays on the 15th and the last day of the month. The pay periods would be the 1st to the 15th and the 16th to the last day of the month.
Every other week, with paydays on Mondays or Fridays. If your pay date is Monday, the pay period would be the previous Monday to Sunday. If your pay date is Friday, the pay period would be the previous Saturday to Friday.
The compensation for salaried employees doesn’t change every period, so it is easiest to auto-approve their compensation. If nothing needs to change, payroll just runs automatically each pay period. If you need to make any changes, like adding a bonus, you just need to do that before the approval deadline.
Admins need to input hours for hourly workers each payroll period. Because you may not have the hours recorded/approved until the last day of the pay period, it is common to set up a pay schedule with a pay date in arrears, i.e., several days after the end of the pay period.
Hourly employees are often on a weekly or every-other-week pay schedule to make it easier to account for overtime hours.
Let’s say that you are using an every-other-week pay schedule and have a 4-day processing period.
You could define a two-week pay period from Monday to Sunday, with a payday the following Friday.
This gives you time to input and approve all hours by the approval deadline on Monday. If you have 2-day processing, you would have until Wednesday to approve payroll.
On the other hand, if you moved the pay date earlier to align with the end of the period, you might have to estimate hours and/or adjust the next pay period with the actual hours. Note that this adds extra complexity and administration, which should be avoided.
It is also common to require payroll approval for hourly workers so you can explicitly review or input hours as part of the process. You can still auto-approve the payroll for hourly workers, but any hours you input would require re-approval. Hourly workers with 0 hours in the period are skipped automatically.
Use the Pay schedules page to configure your pay schedule(s). You can use one pay schedule for multiple employees and/or contractors.
3. Add US employees
4. Onboard US employees
The onboarding process collects key employee information that is required for payroll to process:
Their primary work location/home address for remote workers
Social security number
A bank account for direct deposits
Employees are also asked to complete IRS Form W-4 for federal withholdings. They may also be asked to complete a state-specific withholding form.
When an employee provides a work location in a state that hasn’t previously been entered into Plane, you’ll need to complete the setup for that state. This involves entering payroll tax accounts and tax rates and submitting a filing authorization. This may happen when you're running payroll for the first time or just adding your first employee in a new state. It is important to complete employee onboarding as soon as possible so you can complete these tasks.
You can monitor the status of employee onboarding on the Hire/Onboarding page. You won’t be able to complete the setup for US payroll until all employees have been onboarded, but you can get started.
5. Start US payroll setup
While employees are onboarding, you can get started on the setup for US payroll by visiting Payroll > Settings > US Payroll setup.
Click each panel on the right to access the setup forms, such as Tax setup shown below.
Update company details
Review company details and enter any missing information. This is pre-populated with everything you provided when you first registered with Plane.
Add a bank account
Add a bank account if one hasn't already be added.
Manage tax setup
Provide your company’s EIN to complete the Federal tax setup and work on the tax setup for the states that appear in the list. Additional states may appear in the list as employees complete onboarding and work locations in new states are added.
Each state has different requirements, but generally, business accounts are required for unemployment insurance tax and state income tax. Unemployment insurance tax rates are also required. State websites usually make it easy to determine the rate that should be used for new employers if you haven’t been assigned a rate yet.
If you don’t have a specific account number, either because you haven’t registered yet or have registered and are waiting, please select “I’ve applied for but have not received it yet” for the relevant account number. You can run payroll as long as you made this selection, but you should try to complete the setup before the end of the quarter.
Example of selecting “I’ve applied for…” in Colorado
Authorize payroll filings
IRS Form 8655 Reporting Agent Authorization must be signed and filed to authorize Check, Plane's payroll engine, to collect and file taxes on your behalf. Each state will have an equivalent form. Generally, you will not be able to sign and submit state forms until payroll accounts have been established. When that's the case, you'll come back here on Step #7.
Authorize payroll debits
After you've connected a bank account and it has been verified, you'll need to authorize debits for US payroll. Note: This step is not needed for contractor or EOR payroll.
Complete employee setup
You may have state-specific requirements at the employee level. For example, in the State of Washington, you’ll need to provide information for worker's compensation for the Department of Labor & Industries. A Plane implementation specialist will assist you if this is the case.
6. Register for new states if needed
You must register for payroll tax accounts in the states where employees work. Registration will also establish tax rates and exemptions for your organization.
Plane has partnered with Middesk to make it easier to handle state registrations using the Middesk Agent product. This product is not integrated with Plane, but the integration is on our product roadmap for 2024.
7. Continue US payroll setup
At this point, all US employees who are scheduled for your first payroll run should be onboarded. Head back over to the US Payroll setup to complete the US payroll setup as covered in Step 5.
Your payroll onboarding status should either be Complete or Needs attention. Needs attention is expected when you haven’t received all of the state payroll tax account information and have outstanding filing authorizations to complete.
If your payroll onboarding status is Blocked, Step 8 cannot be initiated. Please review Step 5 if your onboarding status is Blocked.
8. Import historical payroll if needed
This step is not required if you are running payroll for the first time or transitioning to Plane at the start of the year.
If you are transitioning from another payroll provider mid-year, you’ll need to provide payroll details for each employee through the last payroll on your previous provider. This is necessary to ensure the appropriate taxes have been withheld and remitted.
Requirements for historical payroll
All components of earnings and employee and employer taxes are required for the current tax year. The data for complete quarters can be summarized for each employee. If you are transitioning in the middle of a quarter, the details of each paycheck are required.
Let’s say you are transitioning to Plane, and your first pay period is May 1 to May 15th, with a pay date of May 15th. The first quarter has been completed, so the data can be summarized for January through March, i.e., you don’t need to provide the details by paycheck. However, you will need to provide the details of each paycheck for the month of April.
You can also provide all of the details if that is easier, and Plane will handle the rest.
Getting historical payroll data
You can do this by running a payroll journal report or payroll register report from your previous payroll provider. You’ll need to wait until the last payroll has been completed before submitting the data to your Plane implementation contact. It’s a good idea to familiarize yourself with the process and requirements ahead of time so there are no delays.
Please request the import template and export instructions from your Plane implementation contact after all employees have been onboarded.
9. Set up benefits if needed
If you are offering employee benefits that require employer contributions and/or employee deductions, work with your Plane implementation contact to get those set up.
10. Submit for business verification
Plane will submit your company for US payroll business verification. This step can be completed almost immediately if you don’t need to import historical payroll. Otherwise, analyzing your data for tax variances can take up to 2 business days. Any variances will be handled either with a quarter-end filing or via a mid-quarter collection for larger negative variances. If you overpaid taxes, that might result in a year-end refund. You’ll receive a variance report if there is anything significant to report.
11.Complete your 1st payroll run
Now you are ready to complete your first payroll run. Many companies start off with 4-day processing but you may be pre-approved for 2-day processing if they show sufficient liquidity or payroll history for 2-day processing.
If you started with 4-day processing you can request an upgrade to 2-day processing by providing 2 months of business bank statements for the account that is connected to US payroll.
After you have completed your first payroll run, it is a good time to formally end service with your previous payroll provider.
12. Finalize US payroll set
If you previously registered for one or more new states, you’ll need to revisit the state tax setup and filing authorizations once your tax accounts and rates are available. Many states take 2 or more weeks to process your registration.
Go to the US Payroll setup and click ‘Edit’ on the US payroll setup to access the tax setup and filing authorization forms. It is best to complete this before the end of the current quarter and definitely not later than the end of the tax year to avoid filing errors.
If you only need to add contractors to payroll, there are only a few steps:
Set up pay schedules
Assign contractors to those pay schedules
Set up recurring reimbursements (which is available only to contractors)
Both employees and contractors can be assigned to the same pay schedule if needed. All payroll is managed through the same Unified Payroll experience.
You can assign contractors to a pay schedule during onboarding or via the Pay schedules page.
If you need help, please use Plane's in-app chat or reach out to your implementation contact.