Hi again,
If you are a business owner and you have one employee that handles all the payroll duties, you may want to reconsider it? If you are like many other business owners that give the entire payroll duties to one employee in your company, you are asking for trouble. One person payroll department have ripped off many small business owners who don’t know much about payroll.
One of my client’s payroll administrator had 100% control in processing payroll with determining how often the employees are paid, printing checks, signing checks, and delivering checks. This employee had created a phantom employee (also known as a dummy employee), since this was a construction company, it was common to have employees on payroll for a day or two and that would be it. The payroll administrator would create a phantom employee on the payroll and pay that employee once or twice a month. The employee has a fictitous social security number, address, martials status, withholdings, etc, but he would keep a name that is legitimate from a person he knows. Since this was a pre-printed check stock with the signature on it, the employee just had to print it with the dollar amount. The employee will have his acquintance with the legitimate name bring it to a convenince store to cash the check, when the cash is received. The payroll administrator would terminate the employee and delete the employee from the system as it never existed. The payroll administrator did this for 8 months before getting terminated and prosecuted. Since the owner isn’t handling any of the payroll function and nobody else was cross referencing the data and payroll information this person was entering, it’s tough for anybody to monitor the cash flow within payroll.
It’s very important to separate all the tasks, such as having the owner/manager to sign or verify the checks. Please limit access to the payroll administrator to processing checks and enter hours and make somebody in charge of printing checks only. You must make an effort to confirm the payroll data at least once a month. Payroll is probably the largest expense a business owner would have, why wouldn’t you protect it.
