Payroll Check

How payroll checks work for small business owners

Every payroll check starts with the same three steps: calculate gross pay, apply the right withholdings, and document the payroll run.

That holds whether you're paying your employee or paying your own S corporation (S-corp) salary.  

The gross pay vs. net pay calculation comes first: start with what the employee earned, subtract federal payroll taxes, state income tax, Federal Insurance Contributions Act (FICA) taxes (Social Security and Medicare), and other deductions for things like health insurance. What's left is net pay, the amount on the check.

When you hand an employee their payroll check, two things happen. Your employee gets paid. The pay stub, the check number, and your tax payment records connect the payment back to your quarterly and year-end tax filings.

If you pay yourself an S-corporation salary, you’ll use those records to confirm you compensated yourself appropriately.  

With SurePayroll By Paychex, you choose to pay workers through paper payroll check or direct deposit, or both. You setup the automated payroll service based on how it works best for your business.  

What makes a payroll check different from a regular business check

Payroll checks and regular business checks usually look identical: same paper, same format, sometimes from the same bank account.      

A payroll check (ideally from a dedicated payroll account, at minimum from your business account) comes with a full payroll run and a complete record. The wages calculated, payroll taxes withheld, and deductions recorded all connect to that payment. When you file quarterly taxes, your records show exactly what you paid and what you withheld, and those numbers match.

A regular business check can work as a payroll check as long as you run payroll first: doing the      calculations, withholding the taxes, and documenting in your records. Write a check without running payroll, and you have the dollar amount but no data to back it up.  

Payroll checks are numbered in sequence and come with pay stubs for a reason: together, they show your records are organized and complete. Payroll reports (summaries of what you paid each employee, by pay period) are what you would show an auditor or state labor board.

That documentation is important. In fiscal year 2024, the IRS assessed more than 4.4 million employment tax penalties totaling nearly $26.9 billion. Consistent records and matching filings can help keep your business on the right side of those numbers.

What information payroll checks must include

Every payroll check has two parts: the check and the pay stub. They work together: the check delivers the payment, the stub shows how you got there.

The check covers the basics: employee name, net pay amount, a check number (numbered in order so you can track them), date, your signature, and bank account information.

Many payroll checks also include security features like watermarks and void protection that standard business checks don't. Numbering them in sequence lets you track every check issued, confirm which ones have cleared, and keep track of every payment you make and every deduction you record.  

The pay stub shows the detail behind the check: pay period dates, gross wages, and each withholding listed out, including federal and state income tax, Social Security and Medicare taxes, and any voluntary payroll deductions like health insurance premiums, Flexible Spending Account (FSA) contributions, or 401(k) contributions. Net pay at the bottom matches the check amount.  

Every figure needs to be right. Gross wages come from hours worked and pay rate. Withholdings depend on each employee's Form W-4 (Employee's Withholding Certificate), their filing status, current tax tables, and what they've earned so far that year. Getting it right helps keep your check amounts and tax filings complete.

SurePayroll^® By Paychex runs the calculations, gross wages, withholdings, and net pay, and generates the pay stub record each run. You decide how to deliver the payment: write the checks with those amounts or set up direct deposit.  

When payroll checks make sense vs. direct deposit

Both payroll checks and direct deposit go through the same payroll steps. The difference is how your employees get paid. The calculations behind it are the same.

Payroll checks may make sense when you have one or two employees and writing checks on payday takes just a few minutes. They may also make sense if you pay yourself an s-corp salary and want a physical check as part of your compensation records. They also work well when an employee doesn't have a bank account or prefers a physical payment, or when you're just getting started and want to keep things simple.

Direct deposit may make more sense as you grow. Running payroll for five or more employees and paying independent contractors can make check-writing a time-consuming task. Direct deposit sends pay directly to your employees’ accounts, minimizing lost checks, delays, and the time it takes to reissue payments.

Paper checks are the outlier. Nearly 93% of Americans report receiving their wages by direct deposit, according to PayrollOrg’s 205 Getting Paid in America survey. Only 3.3% reported receiving paper checks.  

You can also offer both and let employees decide. Or you can start with checks, move to direct deposit when it makes sense. It’s your decision.

How long payroll checks are valid and what to do with uncashed checks

Payroll checks are valid for 60 to 180 days. After that window, they become expired or what banks call "stale-dated" and won't cash them. If an employee doesn't cash their check, you still owe the wage. You’ll need to reissue a new check for the same amount, document both transactions, and update your records.  

​​​In some states, a check that sits uncashed long enough triggers unclaimed wages law, which requires you to send those wages to the state's unclaimed property office. Check your state's specific rules, since the waiting period varies.

Good records and timely follow-up keep your payroll up-to-date and organized. Confirm employees received their checks and follow up with anyone who hasn't cashed theirs within 30 days. Add a check on uncashed payments to your year-end payroll checklist before you wrap up the year.

Direct deposit handles this automatically. Employees receive their pay on payday and you get confirmation right away.

Setting up payroll for checks or direct deposit

Once you've chosen your payment method, it's time to run payroll: calculate what each person earned, document each pay period, and pay your employees on time. Whether you have one employee or 10, every calculation and tax payment runs before you issue a single check or deposit

SurePayroll automates the calculations. You choose the delivery: write the checks yourself, set up direct deposit, or run both.

Both methods work. The decision comes down to your team size and how you want to run payroll.