Processing payroll in Paylocity follows a consistent cycle: collect and approve employee hours, review the pay batch for accuracy, submit it for processing, and let the platform handle tax filings and direct deposits. Once you understand the sequence and the deadlines that drive it, each pay run becomes a repeatable routine. Here’s what the full process looks like from start to finish.
Set Up Before Your First Run
Before you can process a single paycheck, Paylocity needs foundational data in place. You’ll need your federal Employer Identification Number (EIN) and any state tax ID numbers registered in your account. Employee records must include completed W-4 forms, direct deposit details, benefit elections, and wage or salary rates. If you have hourly workers, your pay codes, overtime rules, and cost center structures should be configured in the Time and Labor module.
You also need a defined payroll schedule. Paylocity lets you set up weekly, biweekly, semimonthly, or monthly pay cycles, and each cycle has a processing deadline, typically two to three business days before the actual pay date. Missing that deadline means employees get paid late, so confirm your schedule and set calendar reminders before you begin.
Track and Import Employee Hours
For hourly employees, the pay cycle starts with time tracking. If your team clocks in and out through Paylocity’s Time and Labor module, those hours accumulate automatically. If you use a third-party timekeeping system, you can import punch data through Paylocity’s Punch Import API, though this requires some initial setup: your administrator needs to configure a File Map inside the Paylocity interface before the integration will accept data. Only finalized, approved punches should be transmitted. Draft or unapproved entries should stay in your timekeeping system until they’re ready.
For salaried employees, Paylocity already knows the pay rate from their employee record, so there’s no time import needed unless you’re tracking PTO usage or other hour-based adjustments.
Review and Approve Timecards
Once hours are in the system, supervisors need to review and approve each employee’s timecard before the payroll batch moves forward. This step catches errors like missed punches, incorrect overtime calculations, or time coded to the wrong department. Each approval should be documented inside the platform, and Paylocity retains that record. This matters if you’re ever audited: the Department of Labor requires employers to maintain payroll records for at least three years under the Fair Labor Standards Act, and a clear supervisor-approval trail is part of that compliance.
Don’t skip this step or rush through it. Correcting a timecard before payroll runs is straightforward. Fixing an overpayment or underpayment after checks are already cut creates extra work and can frustrate employees.
Review the Payroll Batch
With timecards approved, you’ll open the current pay period in Paylocity’s payroll processing area. The platform calculates gross earnings for each employee based on their approved hours (or salary), then applies all deductions: federal and state income tax withholdings based on W-4 elections, Social Security and Medicare taxes, health insurance premiums, retirement contributions, wage garnishments, and any other authorized deductions.
Before you submit, review the pre-process summary carefully. Look for anything unusual:
- New hires or terminations: Confirm that anyone added or removed since the last pay period is reflected correctly.
- Unusually high or low amounts: A gross pay figure that’s significantly different from normal often signals a data entry error or a missing timecard.
- Benefit changes: If open enrollment just closed or an employee had a qualifying life event, verify the new deduction amounts are pulling through.
- One-time adjustments: Bonuses, commissions, retroactive pay increases, or reimbursements need to be entered manually if they aren’t part of the standard calculation.
This review stage is your last chance to make corrections without creating a separate off-cycle run. Take it seriously, especially during your first few pay periods on the platform.
Submit the Payroll
Once everything looks correct, you submit the batch. Paylocity routes direct deposit payments to your banking agent for disbursement, and funds hit employee bank accounts on the scheduled pay date. For any employees still receiving paper checks, the system generates printed checks with pay stubs that you distribute manually.
Timing matters here. Paylocity needs the batch submitted before the processing deadline for your pay date. Direct deposits typically require two banking days to settle, so a Friday pay date usually means your batch needs to be submitted and finalized by end of day Wednesday at the latest. Your specific cutoff time is visible in the platform and depends on your company’s configuration.
Tax Filing and Payments
One of the biggest advantages of using Paylocity is automated tax handling. After each payroll run, the platform calculates and remits federal payroll taxes (Social Security, Medicare, and federal unemployment) along with any federal and state income taxes withheld from employee paychecks. It also handles state-level payroll taxes based on where your employees work.
You still want to verify that tax payments are going out correctly, especially during your first few cycles. Check that tax liability amounts match what you expected, and confirm that Paylocity has the correct state tax account numbers on file. Errors in state tax setup can result in late-payment penalties that fall on you, not the platform.
Post Payroll to Your General Ledger
After all payments are disbursed, record the payroll expenses in your general ledger. Paylocity can generate journal entry summaries that break out gross wages, employer tax contributions, benefits costs, and other deductions by account. If you use accounting software like QuickBooks or a similar platform, Paylocity may integrate directly so these entries post automatically.
The posting process summarizes every transaction from the pay run into the right expense and liability accounts. Gross wages go to your payroll expense account, withheld taxes go to a tax liability account until they’re remitted, and employer-paid benefits land in their respective cost categories. Keeping this in sync each pay period saves significant time at month-end and year-end close.
Running Off-Cycle Payroll
Sometimes you need to pay someone outside the normal schedule. A termination that requires immediate final pay, a missed bonus, or a payroll correction may all call for an off-cycle run. In Paylocity, you can create a separate payroll batch for these situations without affecting your regular schedule. The process mirrors a standard run: enter the earnings or adjustments, review the calculations, and submit. Taxes and deductions are calculated the same way.
Off-cycle runs still need to meet banking deadlines for direct deposit, so plan accordingly. If an employee needs payment the same day, a paper check may be your only option depending on your bank’s processing speed.
Keeping Clean Records
Federal law requires you to retain payroll and tax records for at least three years, covering items like hours worked, wages paid, deductions taken, and tax payments made. Some records, such as those related to wage calculations, must be kept even longer under specific regulations. Paylocity stores payroll history digitally, which handles most of this automatically, but you should know where to find and export reports if you ever need them for an audit, a loan application, or a workers’ compensation review.
After each pay run, pull and save key reports: the payroll register (a line-by-line breakdown of every employee’s earnings and deductions), the tax liability summary, and the general ledger journal entry. Building this habit from the start keeps your records organized and makes year-end tasks like W-2 generation and annual tax reconciliation far less stressful.