34 Payroll Specialist Interview Questions (with Answers)

1.

Can you describe the use of forms W2, W4, and 941?

The interviewer is looking for evidence that you understand the uses of these basic payroll forms. Provide a high-level overview of each of these forms. The way you answer this question will allow the interviewer to gauge your level of experience and knowledge in payroll. It will also show the interviewer your ability to explain an accounting-related term in a way that anyone can understand. Your response should be straightforward and to the point.

Rachelle's Answer

"W2 form is an IRS mandated form that employers must supply to each employee at the beginning of each calendar year which shows annual earnings, taxes withheld, tips, etc. This is the form employees utilize for their personal income taxes each year. A W4 is a form that employees complete to tell the employer the amount of taxes to withhold from their paycheck. The employee identifies their marital status as well as the number of exemptions they would like to claim. A 941 is a document related to the employer's quarterly federal tax payment. This form shows the employer's portion of federal income taxes, Medicare tax, and social security tax. I am well versed in each of these forms."

Rachelle's Answer

"I learned about each of these forms while completing my Payroll Compliance education. From my understanding a W2 form is an IRS mandated form that shows annual earnings, taxes withheld, tips, and more for each employee. An employee completes a W4, telling the employer the amount of taxes they would like withheld from their paycheck. A 941 form shows the employer's portion of federal income taxes, Medicare tax, and social security tax."

2.

Describe a typical payroll day in your current position.

The interviewer would like details around how you organize your payroll days. Perhaps you have a special checklist that you utilize on the day you run payroll, or maybe your software system has a checklist for you. Provide the interviewer with an overview of what an average payroll day looks like for you, remembering that the interviewer's goal is to hear that you are organized, diligent, and pay attention to detail.

Rachelle's Answer

"I have a monthly checklist with different due dates. I split tasks from the start, middle, and end of the month. Then, I put all of these tasks in my Google calendar and set up alerts. Using these organizational tools, I never miss a deadline and focus on efficiency rather than waste time trying to remember what tasks are next. Missing even a single pointer can mean a delay in employee salary distribution which is unacceptable. This importance is why I am sure to remain diligent and pay attention to every deadline and detail."

Rachelle's Answer

"One of the things I love most about my work as a Payroll Specialist is there is no such thing as a 'typical' day. I am always managing an aspect of the payroll cycle, whether in preparation, inputting, processing or auditing. As always, things will come up that my team and I address, such as payroll inquiries from business leaders or employee compensation questions. This variety keeps my role interesting since I love to problem-solve. I'd love it if you could take me through an average day in this position with Company XYZ."

3.

What experience do you have implementing a new payroll system?

If you have experience implementing a new payroll system, discuss your involvement in detail. For instance, the interviewer may want to know how you approached researching new payroll systems. Perhaps you asked for input from other payroll professionals, watched demonstrations, met with vendors, and received numerous quotes before making suggestions to your leadership team. Talk about how you analyzed your organization's needs to select the correct product suggestions and determine which components of the new system would be most critical.

Discuss the stakeholders you worked with to implement the new system, and how you integrated data from the company's existing system. You can also discuss how you communicated with staff to bring them up to speed on locating their pay stubs, and any other pertinent details in the new system.

The interviewer will want to hear that you handled this process carefully while navigating the complex landscape of system changes.

If you have not been part of implementing a new payroll system, be open and honest with the interviewer. Inform the interviewer of the payroll systems you have worked with, and assure them that you are ready to handle tasks that require critical thinking and calculated decision making.

Rachelle's Answer

"I researched and then implemented a new payroll system while working with Company ABC. First, I researched new payroll systems and asked other payroll professionals in my network for their professional opinions. The next step was to analyze our organization's needs to select the correct product as well as product components. Once I narrowed down these components, I watched demonstrations online to determine the top three systems that could meet the organizations' unique needs. Then, I met with vendors and received quotes. I worked in sync with our finance and IT departments to avoid technical or functional errors when we integrated our existing data into the new system. Then, I arranged team training on the new system. Overall, the implementation was a great success. Our company was able to automate many aspects of payroll and there were fewer errors as a result."

Rachelle's Answer

"My work has been with organizations that have solid payroll systems in place. I have worked on a variety of payroll systems in my career, including A, B, and C. Is your organization considering an overhaul of its existing payroll system?"

4.

What information do you need to properly set up an employee into a payroll system?

This basic question will allow the interviewer to gauge your level of experience and knowledge in payroll. It will also show the interviewer your ability to properly set up an employee in a payroll system. Your response should be straightforward and to the point. Be sure to include information on the payroll systems or accounting software you are familiar with.

Rachelle's Answer

"To set up an employee into a payroll system, such as Quickbooks, the details I would include are the employees' full name, date of birth, social insurance number, pay rate, commission and bonus details, and any other variable forms of payment. Also, if the employee would like additional income tax deduced, I would include that information, and any other details the company deems necessary to log."

Rachelle's Answer

"From my understanding, to set up an employee into a payroll system, I should include personal details such as the employee's full name, government ID, compensation details, and any other information required to ensure the employee is paid correctly and within pay regulations for the company's region."

5.

If an employee called in with a payroll complaint, how would you handle it?

The interviewer wants to see that you express empathy and understand how concerning payroll challenges are for employees. They also want to know that you can handle the issue through critical problem-solving. Perhaps you take detailed notes of the employee's complaint and then get to work solving the issue. Maybe you talk through the issue together so that you can solve the payroll problem right away. Sometimes payroll issues need time to figure out. In these instances, inform the interviewer that you express your apologies to the employee and provide an approximate timeline for a solution.

Rachelle's Answer

"As a Payroll Specialist, I am a service provider and the employees that I serve always remain one of my primary areas of focus. For that reason, any valid payroll complaint, such as a missing direct deposit, should be dealt with immediately. When I receive a payroll complaint, my first reaction is to apologize and empathize. Then, I look into the matter ASAP. I take detailed notes of the situation and begin to troubleshoot. Often, the issue comes down to a simple coding error, and I can quickly repair the issue. However, there are times when I need to dig deeper. In that case, I keep the employee updated on the progress and offer a written cheque to supplement their financial concerns until I can resolve their payroll issue."

Rachelle's Answer

"For example: "If an employee reached out with a payroll concern I would listen to the concern, research the issue and find a resolution as soon as possible. I would also note the payroll error and inform the appropriate manager. Payroll concerns are sensitive since employees are relying on their paycheck to be accurate and timely. For that reason, I believe any employee's payroll-related concerns should be resolved within 24 business hours."

Anonymous Answer

"I would put myself in the employee's shoes to be as empathetic as possible, listen carefully, and apologize that the issue occurred. I would take detailed notes of what happened and assure them that we would investigate and resolve it as soon as possible. I'd give them a timeframe of when it would be resolved and when they would hear from me. As I resolve the issue, I would document the resolution process to prevent future reoccurrences. Then I would reach out to inform them it has been resolved, to apologize once more, and to assure them it would never happen again."

Rachelle's Answer

It seems you are highly organized and keen on process, which is fabulous news for a payroll specialist :) You walk through this answer with ease, and your professionalism shines through.

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6.

Each of our buildings has a designated payroll timekeeper that reports biweekly. Two reports are late. How would you approach this situation?

The way you answer this scenario-based question will help the interviewer gauge your level of expertise and learn more about how you react when roadblocks occur in the workplace.

Show that you understand mistakes will occasionally happen. If it is not a recurring issue, you may simply call the responsible party and ensure the missing information is provided as soon as possible. If the issue becomes ongoing, perhaps you would schedule a face-to-face meeting to talk through the problem.

Display that you are a strong communicator by expressing the way you would approach this conversation. For instance, you might let this person know that their actions are impacting the company. You might also create an action plan for change that included consistent follow-ups until the behavior was corrected. Inform the interviewer that you would work with the individual to put a plan in place to eliminate future problems, and if the issue was not resolved, you would escalate the issue appropriately.

Rachelle's Answer

"If this incident was the first time, I would call the person in charge and make sure that the reports were sent to me before any further delays occurred. I would thank them ahead of time for ensuring this situation did not happen again. If this scenario became a regular occurrence, I would arrange a face-to-face meeting with the timekeeper to find out why the problem is recurring. After identifying the root cause of the issue, I would collaborate with my co-worker to formulate a plan so that it didn't happen in the future. If the problem persisted, I would contact the appropriate supervisor and work toward a longer-lasting solution."

Rachelle's Answer

"In this situation, I would reach as soon as the reports were late and ask some open-ended questions, to see if the issue was an isolated incident. If the situation happened again, I would ask to meet with the person to make sure there are no roadblocks such as training, or timing. If the situation called for it, I would invite the associate to cross-train and learn what the reports are used for on the other end. This knowledge might broaden their understanding of the process and the impact a late report can have on other departments and stages of payroll. If the behavior continued, I would take measures to initiate a performance improvement plan."

7.

What are your salary expectation?

In many states, it is now illegal for hiring authorities to ask about your current earnings. For that reason, a vague question regarding your expectations will give the interviewer a solid idea of what you are hoping to earn without crossing any ethical lines.

Typically, when you change jobs, you want to see an increase in wages. Most interviewers aim for a 7-15% increase for each time they change jobs. This range offers room for negotiations with the new company. This percentage increase reflects economic inflation, unique skills you bring from the last time you joined an organization, and an increase in responsibilities.

Salary is an important conversation to have, and now is the time to share your desires and expectations openly.
Be open, and honest. Transparency is the best choice when salary-based questions arise.

If you are newer to your career, or the area, and are unsure of what a fair ask may be, there are many reliable salary calculators available online.

If you do not have salary expectations, it's time to do your research. The more prepared you are with data on fair pay for the market the more the interviewer will respect you and your stance.

Rachelle's Answer

"I am looking for growth in terms of responsibilities as well as in monetary terms. Through my research I see that the market average for this role, for someone with my years of experience ranges between $X nad $X per year. I am also interested in discussing your overall compensation offering in addition to the base salary."

Rachelle's Answer

"As I am new to my career and this industry, I am happy to negotiate my earnings based on your typical salary for this role. From my research, I see that the average Junior Payroll Administrator in the Chicago area earns an annual salary in the $45K to $50K range. I am looking for compensation comparable to the responsibilities of the role. I trust the overall compensation package will be fair, including base salary and other employee benefits. Could you share with me the compensation plan for this role?"

8.

How do you remain up-to-date on payroll rules and techniques?

The interviewer wants to know that you are diligent with remaining in-the-know of payroll rules, laws, and techniques to optimize your time and efficiency. Perhaps you receive email updates from an HR governing body that shares updates, tips, and tricks. Maybe your payroll vendor keeps you in tune with new rules and techniques on their homepage or your dashboard. Or, perhaps you attend payroll-related conferences, seminars, and webinars. Be sure to mention any professional payroll organizations you regularly participate in or hold a membership with. Finally, mention that you network with other payroll professionals in or outside of your company to see what new techniques they are using.

Rachelle's Answer

"I read a few reputable blogs related to payroll, HR, and compensation law. I also follow a few forums online that hosts people in the payroll industry that I trust. Once per year, my current employer arranges for me to attend a payroll-related conference. When I return from these conferences, I hold a weeks' worth of lunch 'n learns to pass my knowledge on to the department. It's very important to me that I remain in-the-know of payroll-related law and strategies so that I am as accurate and efficient as possible for my employer."

Rachelle's Answer

"Remaining in-the-know is a critical part of maintaining compliance and staying current on industry changes and news. I am an active member of multiple payroll associations such as A, B, and C. I read the news every day and am connected with the IRS/DOL on any changes that may impact my work and the efforts of my team."

Anonymous Answer

"Receiving daily emails from different agencies regarding updates on payroll regulations definitely help. Attending payroll-related seminars and conferences is another good way of staying in tune with regulatory developments. Furthermore, consistently checking IRS/DOL websites, doing online research, and networking with other payroll professionals prove to be good supplementary practices."

Rachelle's Answer

Good answer! You are clearly diligent in remaining updated on payroll rules and techniques. It's terrific that you rely on a range of helpful and reputable sources for your information.

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9.

What is the largest payroll run you have been in charge of?

Discuss the largest payroll run you have been in charge of, including details such as dollar amount and total employee headcount. Be sure to mention that you understand how important it is to maintain a high level of detail when working with large sums of money. The interviewer wants assurance that you can manage their payroll volume so be sure to include a qualifying statement at the end of your response.

Rachelle's Answer

"I have handled payroll runs for medium and large size companies. The largest number of employees I have processed payroll for was 557, with the average run amounting to just under $3M. Thanks to my experience working in a variety of companies, I understand the need for accuracy and precision no matter the dollar amounts I am working with. Rest assured I will be just as careful and accurate with 5 employees as I would with 5,000."

Rachelle's Answer

"In my previous role, I was responsible for a $60M weekly payroll for over 20,000 employees worldwide. There were many variables to manage with different locations and laws in place, depending on the region. I am confident that this extensive experience will ensure my success with your organization, considering you have employees across the globe."

Anonymous Answer

"The largest payroll I have been in charge of was $100,000 for a weekly payroll belonging to a travel marketing agency with a fluctuating headcount of around 100 employees. This was only one of 50+ companies that I oversaw payroll for, and they each vary in industry, city, and size. I had to account for each respective company's local regulations. With this experience, I understand the need for precision with money at stake."

Rachelle's Answer

You would certainly have to be diligent with your work's quality, being responsible for 50 companies! Good answer - it's clear that you take pride in your work.

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10.

What are your future plans with the company?

The interviewer wants to know about your career goals and aspirations for a title promotion over time. Be realistic in your timeline for achieving growth. Show enthusiasm for your work as a Payroll Specialist by keeping the bulk of your answer focused on the way you plan to make an impact in this particular job.

Rachelle's Answer

"I am excited about the opportunity to work as a Payroll Specialist for your organization. I believe that this will be a great learning opportunity for me. Some years down the line, I want to earn my way into a team lead or payroll supervisory role; however, I have a lot of experience to gain in this role in the meantime."

Rachelle's Answer

"It is important to me that I grow personally and professionally, regardless of potential title promotions. In this Payroll Specialist role, I welcome the opportunity to learn and thrive while eventually taking on a leadership position as I prove my capabilities. Most of all, I plan to add value and build meaningful relationships that serve the greater good of the company."

11.

Describe to me any payroll process that you have developed or revised.

Think of a payroll-related problem you helped solve. Give the interviewer a brief overview of the problem that was brought to your attention. Discuss the action steps you took to address the issue and any processes you put in place to ensure the problem did not occur again in the future. Explain why you chose this revision and be sure to include the result of your actions. If you are new to your career, think of a problem you faced in school, a team sport, or a volunteer activity. Talk about how you contributed to a solution.

Rachelle's Answer

"While working for Company ABC as a Payroll Assistant, I realized that the timesheets were not populating correctly, and this was resulting in a problem with the calculations of the working hours for the employees. I solicited the help of the finance and IT department, and we worked together to troubleshoot the issue. We were able to repair a bug in the timesheet system, which resulted in well-sorted and accurate data for the employees' logged hours from then on."

Rachelle's Answer

"During my time as Payroll Manager for Company ABC, the organization was growing rapidly. As a result, the payroll department had to reevaluate the entire payroll process. At first, we were using Paychex and calling in the hours each week. As our locations expanded, our headcount increased, and our compensation packages became more complex and varied, we decided to upgrade our payroll technology and process. I led the project, pricing and negotiating a new contract with ADP. We also changed over our time clock system from manual to electronic to eliminate time and errors. It was a significant improvement to the overall process which solved a lot of payroll issues moving forward."

Anonymous Answer

"There were some inaccuracy issues with our system when we processed payroll, which affected the employee’s check. I realized that if the totals didn't match, then the error lay in the parts of the sum. I suggested that we customize a report that compared specific elements such as the hours entered and other relevant components with the timesheet to reconcile the data. We would implement a quick glance at it after completing payroll entry to ensure accuracy. This eliminated inadvertent errors immediately."

Rachelle's Answer

Good thinking on your part! It would be great to include more detail in your story surrounding how you came to your idea. This way, you can take the interviewer through your problem-solving thought process.

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12.

What have you done to improve your written and verbal communication skills?

The interviewer wants to know that you put effort into enhancing your communication, regardless of your professional experience level. Discuss your preferred methods for honing your verbal and written communication skills. You can also discuss how you utilize your new skills in the workplace. If you have noticed a marked improvement from your efforts, be sure to mention this improvement.

Rachelle's Answer

"To improve my verbal communication skills, I attend meetings with a group of international residents in the county and have discussions with them over several topics. I have also been an active member of a photography club where we share information about new techniques and tricks for improving our skills. Apart from that, I attend webinars related to payroll that improve my language skills while keeping me updated on important industry and regulatory changes."

Rachelle's Answer

"Clear communication has been one of my keys to success during school and my recent internship. To continually improve, I use mixed written communication methods while connecting with my leaders and peers. To enhance my verbal communication skills, I recently joined Toastmasters. So far, I have gained a lot of confidence when presenting to small groups."

13.

What are the most important attributes a Payroll Specialist should have?

The interviewer wants to see that you understand the attributes required to succeed in this role and with this company. Most of all, they are seeking assurance that you possess these attributes yourself. Take a look at the job description before heading to the interview, and you will see what attributes are most important to the role. These characteristics will likely be listed in the 'Qualifications' section of the job posting. You will likely see mention of attributes like great attention to detail, strong verbal and written communication skills, robust interpersonal skills, and the ability to solve complex problems. Discuss what you believe to be the most important attributes for a Payroll Specialist to possess and why. Then, provide evidence that you will bring these characteristics to the workplace.

Rachelle's Answer

"I believe that attention to detail, accuracy, and precision along with commendable communication skills are some of the most important attributes a Payroll Specialist should possess. I put attention to detail and accuracy at the highest importance. For instance, when I (tell a brief story of a time when your attention to detail directly impacted the workplace). Since the beginning of my career, I have worked hard to ensure that my written and verbal communication is spot on. For instance, I...(give details of how you have worked to perfect your communication skills). With these attributes, I can avoid mistakes, which in this profession is a top priority."

Rachelle's Answer

"I understand that the attibutes the hiring company is looking for, and some of the most important in this role overall include strong interpersonal skills and the ability to work cross-departmentally. I am able to get along with many personalities and work closely with various groups. For instance, when I was completing my internship, I (tell a brief story of a time when your interpersonal skills shined through). Throughout my time in university, I worked hard to ensure that I could work across various groups and with different professors. This skill will come through very well when I liaise between various department. I look forward to showing this organization these attributes, and more, in action."

14.

Give me examples of the payroll reports you have prepared.

Be prepared with a list of reports that you have prepared, and be ready to provide a high-level overview of the data you understand to be found in these reports. The interviewer wants to see that you have experience preparing reports and that you understand the importance of this data. Talk to the interviewer about the ways you can manipulate data within your payroll system to generate the financial reports your company needs. Be sure to mention the systems and formats with which you are familiar such as Word, Excel, or Adobe.

Rachelle's Answer

"I am well-versed in preparing income statements, new hire reports, promotion reports, deduction reports, leave/absentee reports, and wage types. When necessary, I can manipulate all data provided to me and create reports in any format. Are there any other specifics I can provide you with regarding my payroll reporting experience?"

Rachelle's Answer

"Reports are a large part of streamlining and ensuring the accuracy of the payroll process. I run weekly auditing reports, total time and payments reports, and financial reports to provide my company with the knowledge they need. Each payroll run, I audit the inputs and track the organization's paid time off updates. The internal reporting tool we use is great because I can consistently come up with custom reports to meet the needs of my employer."

Anonymous Answer

"I have primarily used software called Pensoft to generate and customize almost every report crucial to payroll, including but not limited to personnel reports, leave reports, earnings reports, deductions reports, summary reports, accuracy reports, etc. I am also experienced in manipulating data within the system to produce reports in other formats such as Word and Excel. A lot of payroll software function the same on the basic level; thus, my experience will be transferrable."

Rachelle's Answer

Wonderful response! You are very specific and sound confident that your experiences and skills will transfer well to this new role.

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15.

What is a general ledger?

This basic question will allow the interviewer to gauge your level of experience and knowledge in payroll. It will also show the interviewer your ability to explain a payroll-related term in a way that anyone can understand. People can clearly explain concepts they genuinely understand, after all! Your response should be straightforward and to the point. If you want to add a little pizazz into your answer, you can provide an example of your professional experience working with general ledgers.

Rachelle's Answer

"A general ledger or G/L is used by businesses to track financial transactions by assets, liabilities, equity, revenue, and expenses. In my current position, I work with general ledgers daily. For instance, I (give an example of a time when your knowledge of G/L use benefitted your employer)."

Rachelle's Answer

"While completing my Payroll certification, I learned that a general ledger is the main accounting record for a company or organization. It ties into the profit and loss and accounts for all expenses or monies earned across the board. It is an essential financial tool for a business and a Payroll Specialist."

16.