What are the principle reasons for using a special payroll checking account

The principle reason for a business to have a separate special
payroll checking account is for internal payroll control and management. “ Small businesses that
employ people other than the owner or partners are required by the IRS to keep detailed payroll
records.” If a business only has one account that includes payroll, expenses and income, it is
much harder for management to keep track of how much money the company has. By keeping payroll
accounts separate from operating and expense accounts a manager can see very easily how much the
business has paid out to employees for payroll weekly, monthly and yearly. Employees are usually
very sensitive when it comes to their pay, so a special account also helps a business to make
sure the money is there to make timely and accurate payments to employees. (A business might
overdraw an expense account, but by funding a payroll account separate, employees do not have to
worry about their paycheck bouncing.) Another advantage of a separate payroll account is the
ability for a manager to easily find errors, stolen checks and possible employee misuse of the
account.