What Is Payroll Accounting?
Payroll accounting is the method by which a company records employee compensation. This compensation includes wages, bonuses, commissions, and salaries that the employee earned. It also includes withheld taxes, deductions, and superannuation contributions.
Why is Payroll Accounting important?
Employees require compensation for the work they do and payroll accounting ensures employees are compensated correctly for their hours worked. Payroll accounting also provides you with the financial records you need for due diligence purposes.
For example, a business pays its employees an hourly rate based on the number of hours they work each week. As the business pays its employees weekly, the payroll process will take place in the early days of the following work week. If a company uses calendar months for their accounting periods, it will accrue wages and benefits based on the last day of the month.
Using the right payroll system like QuickBooks Payroll makes documenting your financial transactions and maintaining records simple. You would also be able to see the gross wages paid, payroll taxes, deductions, and net pay.