Quarterly balancing payrolls are a special type of payroll introduced to ensure that taxable wages and tax amounts align with agency rules at the end of each quarter. This process helps prevent tax notices and ensures accurate filings and payments. Here's how it works:

What is a Balancing Payroll?

• Purpose: Adjusts taxes calculated throughout the quarter to ensure accuracy.
• Outcome: May result in variance refunds or collections.

How It Works

1. Draft Balancing Payrolls: Throughout the quarter, Arcoro maintains a draft balancing payroll. This draft updates weekly as payroll history changes.
   
2. Approval Timeline: Balancing payrolls are automatically approved on the second business day of the filing month (e.g., January for Q4).
3. Variance Transactions: Collections or refunds are scheduled for three business days after approval.

Reviewing Balancing Payrolls

We recommend proactively reviewing your balancing payroll throughout the quarter. You can monitor your balancing payroll throughout the quarter by accessing the Payroll Batch and reviewing the Payroll Review screen for a detailed breakdown.

If you have any questions about the information in your balancing payroll, please contact the support team.

Understanding Root Cause of Tax Variances

Common examples of tax variances are:

• (Most common) Mid-quarter rate changes — For example, if a company’s state unemployment rate changes mid-quarter, then payrolls that were calculated during the quarter before the rate change was entered in Check will produce a variance.
• Exemptions added or removed — If an exemption to a tax was added or removed mid-quarter, then payrolls that were already processed may produce a variance to retroactively add or remove the tax.
• Mistakes during company setup — A company’s historical payrolls may have been entered with incorrect subject wages or tax amounts.
• Rounding throughout the quarter — Simple rounding differences between calculating a tax payroll by payroll vs. in aggregate on the entire quarter may produce minor variances.
• Other agency-imposed requirements — For example, credit reduction states for FUTA are announced in November ever year, and will appear as tax variances for employers in the affected states in Q4.
• Additional variances — When filing, there may be times where we realize an additional collection or refund is required, resulting in additional debits or credits throughout the filing month.