Lifecycle of a payroll


Guide available

This post has been reworked into a guide: Life of a payroll.

Once a payroll is approved, Check will automatically collect funds from the employer's bank account, make sure wages are transferred into employees' bank accounts on payday, and remit tax payments on time. We handle all of this behind the scenes, but you may still want to keep tabs on the payroll as it moves through each phase of its lifecycle. Check surfaces payroll status information on the payroll objects returned from our API, via the status field. At any given time, a payroll can have one of four valid statuses: draft, pending, processing, and paid. Below is an overview of each status, what they mean, and when you can expect to see them.


When a payroll is first created, it will always be in the draft status. While in draft, a payroll can be modified in any way you see fit; payments to employees can be added and taken away, gross pay and hours worked can be modified, paycheck tips and cash tips can be adjusted, etc. Net pay, taxes, and benefits are null on a draft payroll, because they haven’t been calculated yet. A payroll can be previewed while in draft, which gives you an opportunity to see what these fields would be if the payroll were approved.


When a payroll is approved, its status changes to pending. Once pending, the payroll can no longer be modified or previewed. This is because the taxes, net pay, and benefits have been calculated and saved for the payroll. You can see these when you request the payroll via the API. Near the end of each business day, our internal system scans for any pending payrolls and begins the process of collecting the money to fund that payroll. When this takes place, the payroll is transitioned into the processing status.


Once a payroll is processing, it means that Check has begun the multi-step process of paying the payroll. We begin by issuing an ACH debit transaction to the employer's bank account to withdraw employee wages, employee taxes, and employer taxes. Due to the nature of the ACH protocol, this transaction takes three business days to complete. Once the ACH debit transaction completes successfully, we create ACH credit transactions to deposit each employee's net pay into their bank account on payday.


Once the ACH credit transactions that pay the employees in a payroll have completed (which occurs on the payday specified in the payroll), we transition the payroll into the paid status. Once here, you can rest assured that the payroll you approved has been paid out. The employees are happy, and employers can focus on their business!