Balancing
Streamline your tax process with OnTheClock's essential balancing procedures for payroll accuracy.
What is balancing?
After the end of every quarter, OnTheClock performs a process called “balancing”, in which the taxes that were calculated throughout the quarter (or imported on external payrolls) are adjusted for accuracy and alignment with agency rules.
For example, if a tax has a fixed rate, then balancing will ensure that the tax amounts withheld in the quarter equal the total taxable wages for the quarter multiplied by that rate. Or for a tax like Social Security, which has a cap on wages that can be considered “taxable” in a given year, balancing will adjust taxable wages for the tax to sure that it has not exceeded this limit.
This balancing process is essential to ensuring that OnTheClock is able to file for taxes, and prevents tax notices for the employer. And as part of this process, employers may receive a collection or refund for changes in tax amounts that this balancing process produced (i.e,. “variances”).
How does balancing work in OnTheClock?
Beginning in Q4 2025, in addition to the “regular” and “off cycle” payrolls that are created as companies are running payroll, you will see a special type of payroll called “balancing” payrolls.
Throughout the quarter, OnTheClock maintains a draft balancing payroll for every company with a payday set to the last day of the quarter. This balancing payroll gives you an early signal of any upcoming tax liability adjustments that may result in a variance collection or refund. It recalculates taxes across the quarter to ensure taxable wages and amounts align with agency rules for filing, and it updates weekly as payroll history changes.
This is a standard process in the payroll industry—taxes can fall out of balance for many reasons, such as a mid-quarter rate change or simple rounding drift over time.