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Payroll Setup Guide

Pay your members accurately, step by step

Settings, tax withholding, deductions, bank accounts, pay periods, NACHA export, profit sharing, and year-end tax documents — everything you need to run payroll.

Payroll Setup Guide

This guide walks you through setting up payroll for your organization in FlockWorker, step by step. By the end, your members will be able to receive accurate pay, view their pay stubs, manage deductions, participate in profit sharing, and access tax documents — all in one place. Follow the steps in order — each one builds on the previous.

Check your readiness as you go

The Setup Readiness Check verifies the foundational pieces — EIN and address, an organization bank account, tax withholding rates, at least one pay period, and member bank/tax info — before you run your first payroll. Run it any time to see what's still missing.

Prerequisites

Before You Begin

What you need to get started:

An organization created in FlockWorker (via the Get Started page)
A subscription that includes Payroll (Professional tier and above)
An Admin role or the Accounting Management permission in your organization
Member time entries approved in the HR module (if using time-based pay calculations)

Who can do what

Action	Any Member	Manager	Payroll Admin	Admin
View own pay stubs, tax documents, and deductions	Yes	Yes	Yes	Yes
Add and manage own bank accounts; verify via micro-deposits	Yes	Yes	Yes	Yes
View own payment history and disbursements	Yes	Yes	Yes	Yes
Enter SSN for tax reporting	Yes	Yes	Yes	Yes
View payroll history and reports	—	Yes	Yes	Yes
Create/manage pay periods, run and approve payroll	—	—	Yes	Yes
Configure deductions and tax withholding rates	—	—	Yes	Yes
Create and manage profit sharing distributions	—	—	Yes	Yes
Generate W-2 / 1099 documents and W-2c corrections	—	—	Yes	Yes
Verify member bank accounts (admin verification)	—	—	Yes	Yes
Download NACHA files and manage disbursements	—	—	Yes	Yes
Configure payroll settings and org bank account	—	—	Yes	Yes
Run year-end readiness checks	—	—	Yes	Yes

*Payroll Admin = members with the Accounting Management permission, which admins can grant to trusted members.

Step 1

Configure Payroll Settings

Start here. Payroll settings establish the foundation — your organization's tax details, pay frequency, and banking information. Everything else depends on these being in place.

Go to Payroll → Settings and configure your organization's payroll details:

EIN (Employer Identification Number) — your federal tax ID, required for W-2 generation
Organization Address — your business address, used on tax documents
Pay Frequency — how often you pay your members

Frequency	Pay Periods/Year	Best For
Weekly	52	Hourly workers, seasonal businesses
Bi-weekly	26	Most common; consistent payday every two weeks
Semi-monthly	24	Salaried workers; pays on the 1st and 15th
Monthly	12	Small organizations with salaried members

Tips

Your EIN is on your IRS confirmation letter (Form CP 575) or previous tax filings.
Bi-weekly is the most common pay frequency for cooperatives.
You can change the pay frequency later, but it's easier to set it correctly from the start.
The address you enter appears on all W-2 forms — use your organization's legal address.

Go to Payroll Settings

Step 2

Configure Tax Withholding

Tax rates determine how much is withheld from each member's pay. Set these up before running your first payroll.

Go to Payroll → Tax Config and configure withholding rates:

Tax Type	Typical Rate	What It Covers
Federal Income Tax	Varies by member	Federal income tax withholding (based on W-4)
State Income Tax	Varies by state	State income tax withholding
Social Security (FICA)	6.2%	Social Security contribution (capped at $168,600/year)
Medicare	1.45%	Medicare contribution (no wage cap)

Set your rates before the first run

If no tax configuration exists when you run payroll, FlockWorker falls back to generic placeholder rates (Federal 12%, State 5%, SS 6.2%, Medicare 1.45%) so the run doesn't fail — but those are not your organization's real rates. The Run Payroll screen warns you when this happens. Always save a tax configuration first so withholding is accurate.

Important notes

Social Security withholding stops once a member's annual wages reach the wage base limit ($168,600 for 2025) — FlockWorker handles this cap automatically.
Medicare applies to all wages with no cap.
Federal and state income tax depend on each member's filing status and allowances (set per member in their tax info).
If your state has no income tax (e.g., Texas, Florida, Washington), set the state rate to 0%.

Go to Tax Config

Step 3

Set Up Deductions

Deductions are amounts withheld from pay beyond taxes — things like health insurance, retirement contributions, and union dues.

Go to Payroll → Deductions, click New Deduction to create organization-wide deduction types, then set a name, category, amount or percentage, and frequency.

Category	Tax Treatment	Examples
Benefits	Pre-tax	Health, dental, vision, FSA
Retirement	Pre-tax	401(k), profit sharing plan
Post-tax	After-tax	Roth 401(k), garnishments
Voluntary	Optional	Union dues, charitable contributions
Taxes	Mandatory	Additional state/local taxes

Member-specific deductions

After creating organization-wide types, assign them to individual members with a specific amount/percentage and effective date. Members can view their own active deductions at Payroll → My Deductions — they can see what's deducted and why, but only payroll administrators can change amounts.

Tips

Create deductions for all benefit plans before running your first payroll.
Pre-tax deductions (health insurance, 401k) reduce taxable income, which lowers tax withholding.
Review deductions at the start of each year when benefit plan costs change.

Go to Deductions

Step 4

Add Bank Accounts

Bank accounts enable direct deposit payments. Members add their own accounts; administrators verify them.

For members — adding an account

At Account → Bank Accounts, click Add Account and enter the account holder name, 9-digit routing number (validated with the ABA checksum), account number (encrypted with AES-256-GCM — only the last 4 digits are ever shown), account type, and optional bank name. New accounts start as Pending Verification.

Verification methods

Manual admin verification (all organizations) — the member provides a voided check or bank letter; an admin reviews it at Payroll → Bank Verification and marks the account verified.
Micro-deposit verification (requires Payroll Complete) — two small deposits arrive in 1–3 business days; the member enters the amounts to verify automatically.

Security features

Account numbers are encrypted with AES-256-GCM — only the last 4 digits are visible.
All access to sensitive bank data is logged in a secure audit trail.
Members manage only their own accounts; admins can verify but never see full account numbers.
Members with multiple accounts can star one as primary — the default deposit destination.

Go to My Bank Accounts Go to Bank Verification

Step 5

Create Your First Pay Period

Pay periods define the date range and pay date for each payroll cycle.

Go to Payroll → Pay Periods, click New Pay Period, and set the start date, end date, and pay date. The period is created in Draft status.

Pay period lifecycle

DraftProcessingApprovedPaid

Draft — pay period created, not yet calculated
Processing — payroll is being calculated (pay stubs generated)
Approved — calculations reviewed and approved by an admin
Paid — payments issued; pay stubs available to members

Tips

Create pay periods in advance so they're ready when payroll day arrives.
Pay periods should not overlap — each working day belongs to exactly one period.
View all periods, their status, and totals at Payroll → Pay Periods.

Go to Pay Periods

Step 6

Run Payroll

Running payroll calculates pay for all eligible members based on their hours, rate, and deductions.

Go to Payroll → Run Payroll, select the pay period, and follow the wizard: review members, calculate pay, review & approve, then mark as paid. Members without compensation records are excluded automatically.

Pay calculation formula

How net pay is computed

Gross Pay = (Regular Hours × Rate) + (Overtime Hours × Rate × 1.5) + Bonuses + Additions
Taxable Income = Gross Pay − Pre-Tax Deductions (health, retirement, FSA)
Federal/State Tax = Taxable Income × the configured rate
Social Security = min(YTD Wages, $168,600) × 6.2%; Medicare = Gross Pay × 1.45%
Net Pay = Gross Pay − Pre-Tax Deductions − Taxes − Post-Tax Deductions

Tips

Approve all time entries in the HR module before running payroll.
Review the calculations carefully, especially for the first few pay periods.
The wizard processes members transactionally — if something fails, no partial data is saved.
After running payroll, a NACHA download appears on the completion screen (all tiers).

Go to Run Payroll

Step 7

Issue Payments (NACHA Export)

FlockWorker generates NACHA/ACH files that you upload to your bank to initiate direct deposit payments. Included with all payroll tiers — no add-on required.

On the pay period detail page, find the NACHA Export section. The system checks readiness — organization bank account configured, eligible members with verified bank accounts, and any members who will be skipped — then click Download NACHA File. Upload it in your bank's ACH / direct deposit portal; payments typically settle within 1–2 business days.

Two ways to pay: NACHA export vs. automated ACH

NACHA file export is included in every payroll plan and needs no payment-provider connection — you download the file and upload it to your bank yourself.
Automated ACH payments (paid directly via API, with micro-deposit bank verification) run through FlockWorker's centralized payment provider (Stripe). That connection is configured once at the platform level by your FlockWorker operator — there are no keys or secrets to manage per organization.
Automated ACH also requires the Payroll Complete add-on. Check Payroll → Settings → ACH / Direct Deposit Connection to see whether the platform connection is live and whether automated ACH is enabled for your organization.

Disbursement lifecycle

PendingSubmittedProcessingCompleted

Watch for skipped members and ACH returns

Members without a verified bank account are skipped from the NACHA file — verify accounts first or they won't be paid in that batch.
A member listed with the same routing + account number as another can indicate a duplicate; double-check before uploading to the bank.
If the bank rejects a payment, record the ACH return on the pay period detail page with the standard return code (R01–R29) so the disbursement reflects reality.
Banks have cutoff times for same-day / next-day ACH — download and upload promptly.

After your bank confirms the batch, use Bulk Confirm on the pay period detail page to mark all submitted payments completed in one click. Keep the NACHA reference number — it's stored on each disbursement for traceability.

Go to Pay Periods

Step 8

Set Up Profit Sharing

Profit sharing distributes your cooperative's surplus to worker-owners — a core feature you can configure to reflect your organization's values.

At Payroll → Profit Sharing → Formula, choose how each member's share is calculated:

Method	How Shares Are Calculated	Best For
Hours Worked	Proportional to hours contributed during the period	Organizations where contribution varies significantly
Equal Share	Equal distribution to all eligible members	Small cooperatives emphasizing equality
Tenure-Based	Higher share for longer-tenured members	Organizations that reward loyalty
Hybrid	Custom formula combining multiple factors	Complex distribution needs

How a distribution is calculated and shared out

The total pool you enter is divided among eligible members according to the selected method. With Hours Worked, each member receives pool × (their hours ÷ all members' hours); with Equal Share, the pool is split evenly; tenure and hybrid methods weight shares by length of service or your custom factors. Preview the per-member shares before submitting — the amounts then appear on member pay stubs once approved.

Create a distribution at Payroll → Profit Sharing → New Distribution: set the period, total pool, and method, preview the shares, and submit for approval. If your bylaws require a membership vote, create a governance proposal first.

Tips

Document your profit sharing formula in your bylaws for transparency and democratic accountability.
Consider linking distributions to governance proposals so members vote on surplus allocation.
Review your formula annually so it still reflects the organization's values and finances.

Go to Profit Sharing

Step 9

Tax Information and SSN Collection

Before generating year-end tax documents, you need to collect member tax information.

Members enter their own SSN at Account → Tax Info. It's encrypted with AES-256-GCM, stored separately from the member profile, and never displayed in full after entry (only a masked version like ***-**-1234). Access is logged in the sensitive data access audit trail.

Year-end readiness

Before generating tax documents, run the year-end check at Payroll → Year-End → Readiness. Each check shows a green checkmark or a red flag with instructions, and all must pass before you can generate documents:

Check	What It Verifies
Pay Periods Paid	All pay periods for the tax year are marked paid
Tax Withholding Configured	Federal and state tax rates are set up
EIN Present	Your organization's EIN is on file
Address Configured	Your organization's legal address is entered
SSN Collection Complete	All active members have provided their SSN

Tips

Start the readiness check in early January — don't wait until the January 31 deadline.
Send reminders to members who haven't entered their SSN.
If a member left during the year, you still need their SSN for their W-2.

Go to My Tax Info Go to Year-End Readiness

Step 10

Generate Tax Documents

FlockWorker generates W-2 and 1099 tax documents for your members.

At Payroll → Tax Documents → Admin, generate W-2s individually or in bulk (members who already have a W-2 for the year are skipped). The system aggregates each member's pay stubs for the year and calculates the W-2 box values (wages, federal/state withholding, Social Security, Medicare). Generate 1099-NEC for contractor payments by entering the year's total.

How tax documents are filed

GeneratedReviewedFinalizedE-filed

Where each document is filed

FlockWorker routes filings to the right agency automatically: W-2 / W-3 e-filing goes to the SSA (Social Security Administration's Business Services Online), while 1099-NEC, 1099-MISC, 1095-C, 1094-C, and W-2c corrections route to Tax1099. You don't choose the destination — generating and submitting the document sends it to the correct service. Acceptance and rejection status from the IRS / SSA surface on the Year-End Readiness page.

Corrections (W-2c)

If you discover an error after distribution, use the W-2c correction workflow — never delete and regenerate a distributed W-2.
You can only correct W-2s that are not in draft status, and each W-2 can have one correction (correct the W-2c if you need another).
At least one value must actually change for a correction to be created.

Document	Delivered to Members By	Filed with IRS/SSA By
W-2	January 31	January 31 (electronic)
1099-NEC	January 31	January 31 (electronic)

Go to Tax Documents (Admin)

Reference

Multi-State Payroll

When members live or work in different states, withholding gets more nuanced. Here's what to know.

Work state drives state withholding

Each member's state income tax withholding follows their work state, set in their tax info — not just the organization's default state code.
Members in a state with no income tax (e.g., TX, FL, WA) have $0 state withholding even if your org default state has a rate.
Reciprocity agreements and local taxes can apply where a member lives in one state and works in another — collect accurate work-state and residence info during onboarding.
Set the organization-wide default state and rate in Tax Config; per-member work state and filing details live in each member's tax info.

Manage work locations & reciprocity in one place

Work Locations & Reciprocity (under Payroll → Settings) lists every active member with their current work state, resident state, and reciprocity status.
When a member lives in one state and works in another, the page shows whether a reciprocity agreement exists and which certificate to file (e.g., PA REV-419, NJ-165) so payroll withholds for their home state.
Reciprocity agreements are maintained in code and reviewed like the state tax tables — they're not organization-editable. Record each member's certificate from their Manage page.
Without a certificate on file, work-state withholding still applies — that's the safe default, not an error.

Manage Work Locations & Reciprocity Go to Tax Config

Reference

Payroll Complete Add-On

For organizations that want hands-off payment automation, the Payroll Complete add-on adds premium features beyond the base payroll module.

Feature	Base Payroll	Payroll Complete
Pay periods, pay stubs, deductions, profit sharing	Yes	Yes
NACHA file export	Yes	Yes
W-2 / 1099 generation and W-2c corrections	Yes	Yes
Manual bank account verification	Yes	Yes
Micro-deposit bank verification	—	Yes
Automated ACH payments via API	—	Yes
IRS e-filing integration	—	Yes

Pricing is $29/month base + $2/member/month (e.g., 15 members = $59/month). Enable it from Payroll → Settings or the subscription management page; premium features become available immediately. When it's not enabled, premium features show an upgrade prompt.

Manage Subscription

Ongoing

Day-to-Day Payroll Operations

Once setup is complete, here's how payroll runs on an ongoing basis.

Activity	How Often
Review and approve time entries	Before each payroll run
Run payroll	Per your pay frequency (weekly, bi-weekly, etc.)
Download and upload NACHA files	After each payroll run
Confirm payment disbursements	After the bank processes the ACH batch
Review and reconcile payroll totals	Monthly
Update tax withholding rates	Annually (or when rates change)
Run year-end readiness check	Early January
Generate and distribute W-2s	January (before January 31)
Create profit sharing distributions	Per your distribution schedule

Work more efficiently

Bulk-confirm disbursements after your bank processes an ACH batch.
Export payroll history to CSV for your accountant or bookkeeper.
Run the year-end readiness check in early January to catch missing data before the W-2 deadline.
Set up profit sharing early so calculations are ready when surplus is declared.
Review pay stubs before marking paid on the first few runs to catch configuration issues.

Payroll History Payroll Reports

Quick reference

Setup Checklist

Follow these steps in order — each builds on the previous. Run the Setup Readiness Check any time to see what's still missing.

Step	What to Do	Why This Order
1	Configure payroll settings (EIN, address, pay frequency)	Foundation — tax docs and NACHA files need this
2	Configure tax withholding rates	Determines how much is deducted from each paycheck
3	Set up deductions (benefits, retirement, etc.)	Defines non-tax withholdings before the first run
4	Have members add bank accounts; verify them	Enables direct deposit payments
5	Create your first pay period	Defines the date range and pay date
6	Run payroll for the first time	Calculates pay and generates pay stubs
7	Download the NACHA file and submit to your bank	Issues direct deposit payments
8	Set up the profit sharing formula and settings	Prepares for surplus distributions
9	Collect member SSNs and run year-end readiness	Required before generating tax documents
10	Generate and distribute W-2s and 1099s	Meets IRS reporting requirements

Run the Setup Readiness Check Open Payroll

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Payroll Setup Guide

Pay your members accurately, step by step

Settings, tax withholding, deductions, bank accounts, pay periods, NACHA export, profit sharing, and year-end tax documents — everything you need to run payroll.

Payroll Setup Guide

Check your readiness as you go

Prerequisites

Before You Begin

What you need to get started:

An organization created in FlockWorker (via the Get Started page)
A subscription that includes Payroll (Professional tier and above)
An Admin role or the Accounting Management permission in your organization
Member time entries approved in the HR module (if using time-based pay calculations)

Who can do what

Action	Any Member	Manager	Payroll Admin	Admin
View own pay stubs, tax documents, and deductions	Yes	Yes	Yes	Yes
Add and manage own bank accounts; verify via micro-deposits	Yes	Yes	Yes	Yes
View own payment history and disbursements	Yes	Yes	Yes	Yes
Enter SSN for tax reporting	Yes	Yes	Yes	Yes
View payroll history and reports	—	Yes	Yes	Yes
Create/manage pay periods, run and approve payroll	—	—	Yes	Yes
Configure deductions and tax withholding rates	—	—	Yes	Yes
Create and manage profit sharing distributions	—	—	Yes	Yes
Generate W-2 / 1099 documents and W-2c corrections	—	—	Yes	Yes
Verify member bank accounts (admin verification)	—	—	Yes	Yes
Download NACHA files and manage disbursements	—	—	Yes	Yes
Configure payroll settings and org bank account	—	—	Yes	Yes
Run year-end readiness checks	—	—	Yes	Yes

*Payroll Admin = members with the Accounting Management permission, which admins can grant to trusted members.

Step 1

Configure Payroll Settings

Start here. Payroll settings establish the foundation — your organization's tax details, pay frequency, and banking information. Everything else depends on these being in place.

Go to Payroll → Settings and configure your organization's payroll details:

EIN (Employer Identification Number) — your federal tax ID, required for W-2 generation
Organization Address — your business address, used on tax documents
Pay Frequency — how often you pay your members

Frequency	Pay Periods/Year	Best For
Weekly	52	Hourly workers, seasonal businesses
Bi-weekly	26	Most common; consistent payday every two weeks
Semi-monthly	24	Salaried workers; pays on the 1st and 15th
Monthly	12	Small organizations with salaried members

Tips

Your EIN is on your IRS confirmation letter (Form CP 575) or previous tax filings.
Bi-weekly is the most common pay frequency for cooperatives.
You can change the pay frequency later, but it's easier to set it correctly from the start.
The address you enter appears on all W-2 forms — use your organization's legal address.

Go to Payroll Settings

Step 2

Configure Tax Withholding

Tax rates determine how much is withheld from each member's pay. Set these up before running your first payroll.

Go to Payroll → Tax Config and configure withholding rates:

Tax Type	Typical Rate	What It Covers
Federal Income Tax	Varies by member	Federal income tax withholding (based on W-4)
State Income Tax	Varies by state	State income tax withholding
Social Security (FICA)	6.2%	Social Security contribution (capped at $168,600/year)
Medicare	1.45%	Medicare contribution (no wage cap)

Set your rates before the first run

Important notes

Social Security withholding stops once a member's annual wages reach the wage base limit ($168,600 for 2025) — FlockWorker handles this cap automatically.
Medicare applies to all wages with no cap.
Federal and state income tax depend on each member's filing status and allowances (set per member in their tax info).
If your state has no income tax (e.g., Texas, Florida, Washington), set the state rate to 0%.

Go to Tax Config

Step 3

Set Up Deductions

Deductions are amounts withheld from pay beyond taxes — things like health insurance, retirement contributions, and union dues.

Go to Payroll → Deductions, click New Deduction to create organization-wide deduction types, then set a name, category, amount or percentage, and frequency.

Category	Tax Treatment	Examples
Benefits	Pre-tax	Health, dental, vision, FSA
Retirement	Pre-tax	401(k), profit sharing plan
Post-tax	After-tax	Roth 401(k), garnishments
Voluntary	Optional	Union dues, charitable contributions
Taxes	Mandatory	Additional state/local taxes

Member-specific deductions

Tips

Create deductions for all benefit plans before running your first payroll.
Pre-tax deductions (health insurance, 401k) reduce taxable income, which lowers tax withholding.
Review deductions at the start of each year when benefit plan costs change.

Go to Deductions

Step 4

Add Bank Accounts

Bank accounts enable direct deposit payments. Members add their own accounts; administrators verify them.

For members — adding an account

Verification methods

Manual admin verification (all organizations) — the member provides a voided check or bank letter; an admin reviews it at Payroll → Bank Verification and marks the account verified.
Micro-deposit verification (requires Payroll Complete) — two small deposits arrive in 1–3 business days; the member enters the amounts to verify automatically.

Security features

Account numbers are encrypted with AES-256-GCM — only the last 4 digits are visible.
All access to sensitive bank data is logged in a secure audit trail.
Members manage only their own accounts; admins can verify but never see full account numbers.
Members with multiple accounts can star one as primary — the default deposit destination.

Go to My Bank Accounts Go to Bank Verification

Step 5

Create Your First Pay Period

Pay periods define the date range and pay date for each payroll cycle.

Go to Payroll → Pay Periods, click New Pay Period, and set the start date, end date, and pay date. The period is created in Draft status.

Pay period lifecycle

DraftProcessingApprovedPaid

Draft — pay period created, not yet calculated
Processing — payroll is being calculated (pay stubs generated)
Approved — calculations reviewed and approved by an admin
Paid — payments issued; pay stubs available to members

Tips

Create pay periods in advance so they're ready when payroll day arrives.
Pay periods should not overlap — each working day belongs to exactly one period.
View all periods, their status, and totals at Payroll → Pay Periods.

Go to Pay Periods

Step 6

Run Payroll

Running payroll calculates pay for all eligible members based on their hours, rate, and deductions.

Pay calculation formula

How net pay is computed

Gross Pay = (Regular Hours × Rate) + (Overtime Hours × Rate × 1.5) + Bonuses + Additions
Taxable Income = Gross Pay − Pre-Tax Deductions (health, retirement, FSA)
Federal/State Tax = Taxable Income × the configured rate
Social Security = min(YTD Wages, $168,600) × 6.2%; Medicare = Gross Pay × 1.45%
Net Pay = Gross Pay − Pre-Tax Deductions − Taxes − Post-Tax Deductions

Tips

Approve all time entries in the HR module before running payroll.
Review the calculations carefully, especially for the first few pay periods.
The wizard processes members transactionally — if something fails, no partial data is saved.
After running payroll, a NACHA download appears on the completion screen (all tiers).

Go to Run Payroll

Step 7

Issue Payments (NACHA Export)

FlockWorker generates NACHA/ACH files that you upload to your bank to initiate direct deposit payments. Included with all payroll tiers — no add-on required.

Two ways to pay: NACHA export vs. automated ACH

NACHA file export is included in every payroll plan and needs no payment-provider connection — you download the file and upload it to your bank yourself.
Automated ACH payments (paid directly via API, with micro-deposit bank verification) run through FlockWorker's centralized payment provider (Stripe). That connection is configured once at the platform level by your FlockWorker operator — there are no keys or secrets to manage per organization.
Automated ACH also requires the Payroll Complete add-on. Check Payroll → Settings → ACH / Direct Deposit Connection to see whether the platform connection is live and whether automated ACH is enabled for your organization.

Disbursement lifecycle

PendingSubmittedProcessingCompleted

Watch for skipped members and ACH returns

Members without a verified bank account are skipped from the NACHA file — verify accounts first or they won't be paid in that batch.
A member listed with the same routing + account number as another can indicate a duplicate; double-check before uploading to the bank.
If the bank rejects a payment, record the ACH return on the pay period detail page with the standard return code (R01–R29) so the disbursement reflects reality.
Banks have cutoff times for same-day / next-day ACH — download and upload promptly.

Go to Pay Periods

Step 8

Set Up Profit Sharing

Profit sharing distributes your cooperative's surplus to worker-owners — a core feature you can configure to reflect your organization's values.

At Payroll → Profit Sharing → Formula, choose how each member's share is calculated:

Method	How Shares Are Calculated	Best For
Hours Worked	Proportional to hours contributed during the period	Organizations where contribution varies significantly
Equal Share	Equal distribution to all eligible members	Small cooperatives emphasizing equality
Tenure-Based	Higher share for longer-tenured members	Organizations that reward loyalty
Hybrid	Custom formula combining multiple factors	Complex distribution needs

How a distribution is calculated and shared out

Tips

Document your profit sharing formula in your bylaws for transparency and democratic accountability.
Consider linking distributions to governance proposals so members vote on surplus allocation.
Review your formula annually so it still reflects the organization's values and finances.

Go to Profit Sharing

Step 9

Tax Information and SSN Collection

Before generating year-end tax documents, you need to collect member tax information.

Year-end readiness

Check	What It Verifies
Pay Periods Paid	All pay periods for the tax year are marked paid
Tax Withholding Configured	Federal and state tax rates are set up
EIN Present	Your organization's EIN is on file
Address Configured	Your organization's legal address is entered
SSN Collection Complete	All active members have provided their SSN

Tips

Start the readiness check in early January — don't wait until the January 31 deadline.
Send reminders to members who haven't entered their SSN.
If a member left during the year, you still need their SSN for their W-2.

Go to My Tax Info Go to Year-End Readiness

Step 10

Generate Tax Documents

FlockWorker generates W-2 and 1099 tax documents for your members.

How tax documents are filed

GeneratedReviewedFinalizedE-filed

Where each document is filed

Corrections (W-2c)

If you discover an error after distribution, use the W-2c correction workflow — never delete and regenerate a distributed W-2.
You can only correct W-2s that are not in draft status, and each W-2 can have one correction (correct the W-2c if you need another).
At least one value must actually change for a correction to be created.

Document	Delivered to Members By	Filed with IRS/SSA By
W-2	January 31	January 31 (electronic)
1099-NEC	January 31	January 31 (electronic)

Go to Tax Documents (Admin)

Reference

Multi-State Payroll

When members live or work in different states, withholding gets more nuanced. Here's what to know.

Work state drives state withholding

Each member's state income tax withholding follows their work state, set in their tax info — not just the organization's default state code.
Members in a state with no income tax (e.g., TX, FL, WA) have $0 state withholding even if your org default state has a rate.
Reciprocity agreements and local taxes can apply where a member lives in one state and works in another — collect accurate work-state and residence info during onboarding.
Set the organization-wide default state and rate in Tax Config; per-member work state and filing details live in each member's tax info.

Manage work locations & reciprocity in one place

Work Locations & Reciprocity (under Payroll → Settings) lists every active member with their current work state, resident state, and reciprocity status.
When a member lives in one state and works in another, the page shows whether a reciprocity agreement exists and which certificate to file (e.g., PA REV-419, NJ-165) so payroll withholds for their home state.
Reciprocity agreements are maintained in code and reviewed like the state tax tables — they're not organization-editable. Record each member's certificate from their Manage page.
Without a certificate on file, work-state withholding still applies — that's the safe default, not an error.

Manage Work Locations & Reciprocity Go to Tax Config

Reference

Payroll Complete Add-On

For organizations that want hands-off payment automation, the Payroll Complete add-on adds premium features beyond the base payroll module.

Feature	Base Payroll	Payroll Complete
Pay periods, pay stubs, deductions, profit sharing	Yes	Yes
NACHA file export	Yes	Yes
W-2 / 1099 generation and W-2c corrections	Yes	Yes
Manual bank account verification	Yes	Yes
Micro-deposit bank verification	—	Yes
Automated ACH payments via API	—	Yes
IRS e-filing integration	—	Yes

Manage Subscription

Ongoing

Day-to-Day Payroll Operations

Once setup is complete, here's how payroll runs on an ongoing basis.

Activity	How Often
Review and approve time entries	Before each payroll run
Run payroll	Per your pay frequency (weekly, bi-weekly, etc.)
Download and upload NACHA files	After each payroll run
Confirm payment disbursements	After the bank processes the ACH batch
Review and reconcile payroll totals	Monthly
Update tax withholding rates	Annually (or when rates change)
Run year-end readiness check	Early January
Generate and distribute W-2s	January (before January 31)
Create profit sharing distributions	Per your distribution schedule

Work more efficiently

Bulk-confirm disbursements after your bank processes an ACH batch.
Export payroll history to CSV for your accountant or bookkeeper.
Run the year-end readiness check in early January to catch missing data before the W-2 deadline.
Set up profit sharing early so calculations are ready when surplus is declared.
Review pay stubs before marking paid on the first few runs to catch configuration issues.

Payroll History Payroll Reports

Quick reference

Setup Checklist

Follow these steps in order — each builds on the previous. Run the Setup Readiness Check any time to see what's still missing.

Step	What to Do	Why This Order
1	Configure payroll settings (EIN, address, pay frequency)	Foundation — tax docs and NACHA files need this
2	Configure tax withholding rates	Determines how much is deducted from each paycheck
3	Set up deductions (benefits, retirement, etc.)	Defines non-tax withholdings before the first run
4	Have members add bank accounts; verify them	Enables direct deposit payments
5	Create your first pay period	Defines the date range and pay date
6	Run payroll for the first time	Calculates pay and generates pay stubs
7	Download the NACHA file and submit to your bank	Issues direct deposit payments
8	Set up the profit sharing formula and settings	Prepares for surplus distributions
9	Collect member SSNs and run year-end readiness	Required before generating tax documents
10	Generate and distribute W-2s and 1099s	Meets IRS reporting requirements

Run the Setup Readiness Check Open Payroll

Human Resources

Finance & Payroll

Inventory

Payroll Setup Guide

Payroll Setup Guide

Before You Begin

Who can do what

Configure Payroll Settings

Configure Tax Withholding

Set Up Deductions

Member-specific deductions

Add Bank Accounts

For members — adding an account

Verification methods

Create Your First Pay Period

Pay period lifecycle

Run Payroll

Pay calculation formula

Issue Payments (NACHA Export)

Disbursement lifecycle

Set Up Profit Sharing

Tax Information and SSN Collection

Year-end readiness

Generate Tax Documents

How tax documents are filed

Multi-State Payroll

Payroll Complete Add-On

Day-to-Day Payroll Operations

Setup Checklist

Payroll Setup Guide

Payroll Setup Guide

Before You Begin

Who can do what

Configure Payroll Settings

Configure Tax Withholding

Set Up Deductions

Member-specific deductions

Add Bank Accounts

For members — adding an account

Verification methods

Create Your First Pay Period

Pay period lifecycle

Run Payroll

Pay calculation formula

Issue Payments (NACHA Export)

Disbursement lifecycle

Set Up Profit Sharing

Tax Information and SSN Collection

Year-end readiness

Generate Tax Documents

How tax documents are filed

Multi-State Payroll

Payroll Complete Add-On

Day-to-Day Payroll Operations

Setup Checklist