Beyond Wages: Expert Payroll Accounting
Accounting is a critical part of every business, but what is payroll accounting? This field of accounting focuses on everything that has to do with payroll- not just salaries and wages but benefit costs and payroll taxes, too. A huge benefit of payroll accounting is a better understanding of the cost of each employee, which is the key to smart growth. Because employees are the backbone of any organization or business venture.
Our expert accountant in Broken Arrow, OK, offers payroll accounting services that help benefit the growth and development of your organization exponentially.
What is payroll accounting?
Payroll accounting entails tracking, filing, and paying your employees for a specified time. The payroll process includes the following primary tasks:
- Tracking your employee’s work hours
- Computing the worker’s pay
- Distributing salaries and wages
It also involves the following accounting functions:
- Recording and calculating overtime (OT) pay
- Approving and computing sick and vacation leaves
- Calculating company bonuses and business profits
- Disbursing payments for government benefits
- Recording and filing employee taxes
What are the types of payroll accounting?
Payroll accounting comprises three types of accounting:
- Initial recordings
- These are primary transactions carried out in payroll accounting.
- The gross wages of the employees and their corresponding withholdings are recorded.
- These recordings also include and account for employment taxes.
- Accrued wages
- These are wages that your business owes to the employees corresponding to the service disbursed and are yet to be paid.
- Manual payments
- These are classified as the payments that are made when employees terminate their services to your business.
What is the importance of payroll accounting?
There are several reasons that make payroll accounting a must for your organization, such as:
- Keeping track of salaries and wages of a large group of employees all at once.
- Offering administrative functions that ensure that the employees get their dues on time
- Ensuring that the organization complies with legal and tax laws
- Ensuring proper and transparent financial management within the organization
- Monitoring the payroll expenditures and ensuring that the organization does not waste too much of its financial resources.
- Performing necessary actions to compute the correct tax and report the same to the Internal Revenue Service.
Payroll accounting allows your team to get an accurate idea of the cost of paying your employees. With the right payroll software, you can expand your workforce and cater to businesses of different sizes. To choose the right payroll software for your business, consider your objectives and budget, then choose the solution that aligns with them.