If you have employees, you are responsible for tracking wages, withholding taxes, and maintaining accurate payroll records in accordance with federal and state regulations. Payroll is one of the most important — and most heavily monitored — areas of accounting for any business.

MLS 2026 provides an integrated Payroll system that helps manage:

•employee earnings

•payroll taxes

•deductions

•payroll checks

•General Ledger posting

•year-end reporting

while maintaining the records required for proper bookkeeping and tax reporting.

Why Payroll Accuracy Matters

Payroll affects:

•employees

•tax agencies

•accounting records

•cash flow

•financial reporting

Mistakes in payroll can quickly create:

•unhappy employees

•tax penalties

•accounting problems

•government compliance issues

For this reason:

⚠️ payroll should always be processed carefully and reviewed thoroughly before checks are issued.

Employee Record Keeping

Certain employee information must be maintained accurately, including:

•full legal name

•address

•Social Security number

•wage information

•tax withholding status

•payment history

Employers must also maintain records of:

•gross wages

•deductions

•taxes withheld

•payment dates

•pay periods

MLS 2026 stores this information within the employee records and payroll history files.

Tax Responsibilities

Employers are responsible for collecting and remitting:

•federal income tax withholding

•state income tax withholding (where applicable)

•Social Security (FICA)

•Medicare

•unemployment taxes (FUTA and state programs)

Tax rates and withholding requirements are established by:

•the IRS

•state tax agencies

•local taxing authorities (in some regions)

Federal payroll information is published in:

•IRS Circular E (Employer’s Tax Guide)

These requirements may change from year to year.

W-4 and Employee Withholding

Employees complete:

•W-4 withholding forms

which determine the amount of federal withholding deducted from payroll.

These forms should be:

•completed properly

•retained by the employer

•updated whenever employee withholding changes

MLS 2026 uses this information when calculating payroll deductions.

Gross Pay, Deductions, and Net Pay

Payroll processing begins with:

👉 Gross Pay

This may include:

•hourly wages

•salaries

•commissions

•bonuses

•flat-rate earnings

•incentives

From gross pay, the system calculates:

•taxes

•insurance deductions

•retirement deductions

•garnishments

•other withholding items

These amounts are known as:

👉 Deductions

The amount the employee actually receives is:

👉 Net Pay

MLS 2026 automatically calculates and tracks all of these values.

Integrated Accounting

Payroll in MLS 2026 is tightly integrated with:

•Banking

•General Ledger

•Workorders

•Departments

•Merchant Services

When payroll is processed, the system automatically updates:

•payroll expense accounts

•liability holding accounts

•bank balances

•employee history

•payroll reports

This dramatically reduces duplicate bookkeeping.

Payroll Tax Deposits and Reporting

Payroll taxes must be:

•collected properly

•deposited on schedule

•reported accurately

Depending on your payroll volume, deposits may be required:

•monthly

•semi-weekly

•quarterly

MLS 2026 maintains the information needed for:

•payroll summaries

•tax reporting

•quarterly review

•year-end processing

Year-End Processing

At the end of the year, employers must provide employees with:

•W-2 forms

summarizing:

•wages paid

•taxes withheld

•deductions

Copies must also be submitted to:

•the IRS

•state agencies

MLS 2026 maintains payroll history information necessary for year-end reporting.

Important Reality About Payroll

Payroll is one of the few accounting areas where:

•mistakes are noticed immediately

•employees depend on accuracy

•government agencies monitor compliance closely

For this reason:

👉 consistency and careful procedures matter more than speed.

Recommended Payroll Habits

Healthy payroll management includes:

•accurate employee setup

•timely payroll processing

•regular review of deductions

•verification of tax totals

•prompt payroll deposits

•careful reconciliation of payroll accounts

Businesses that follow these procedures rarely experience serious payroll problems.

In This Section

The following pages explain:

•payroll setup

•employee records

•payroll processing

•payroll deductions

•check processing

•payroll reports

•tax tracking

•troubleshooting

•monthly payroll procedures

Together, these sections provide a complete payroll management system within MLS 2026.