When completing your company payroll management system, there are payments that are subtracted from the business’ cash account. Payroll accounting in UAE actually involves different kinds of accounts within a business’ financial ledger. It is important to have a complete understanding on which ones get affected by every single payroll action in order to keep everything balanced out.
The wages that are paid to employees are likely to be the largest expense of a business and they entered in the business accounting ledger. The figure is every employee’s pay that’s the gross amount. Remember that the amount is representative of the take home pay or net income as well as the deductions and contributions that are associated with every employee’s gross pay. An expense account increases every single pay period in a year as employees are continually paid.
As a staff member is being paid every pay period, deductions and contributions also get withheld from a paycheck. The amounts are considered as liabilities. They represent funds which a business owner owes to different authorities or third parties. Charts of accounts of a business often have sub accounts which are separate for every third party that requires payment from an employee’s paycheck as agreed in the employment contract and laid out in the employment and labor legislation. Having sub accounts separate for each entity is the easiest way in seeing the amount that’s paid to every third party as it’s broken down and presented on the pay stub of an employee.
Similarly, deductions may also be made from the pay of an employee for a portion of the health insurance or life or retirement plans that the employee participates in. Amounts of deductions are also considered as liabilities. Funds then have to be forwarded to insurance companies or any third party. They may also be deposited with the relevant investment companies.
Accounting for assets
When making payroll deposits to government authorities, transfer investment money, or pay for insurance, each payment has to be registered by a business against its Asset Account. The assets are the ones that are of value in which the company owns. This includes money and the items that are needed in running the business such as vehicles, buildings, and equipment. When paying the deductibles from an employee’s paycheck, asset account is being reduced as there is less cash that’s on hand by the business. Also, the liability account will be reduced as the business has paid the deductions or withholding. The business doesn’t owe them anymore.
Payroll Specialists in UAE
With accurate data input and expert data handling, the books of accounts of a business should be in balance. If you are utilizing manual payroll processing, it may be a challenge to keep up with all of the business’ payroll tasks. With the help of Payroll Middle East, the entire payroll process is made easier to manage as experts are doing not only the calculation of the payroll of the business, but also handling payroll accounting which can be confusing for busy business owners.
This means your payroll employee simply has to enter the hours of each staff member. With our team’s help, we can help you keep track of everything that your business owes and payments automatically get subtracted from the applicable accounts as necessary. Contact us today if you want to consult with a payroll specialist in UAE.
Why do businesses in UAE outsource payroll?
Outsourcing payroll in UAE allows a business to have the ability in putting their full concentration on the areas that are income-generating. Outsourced payroll, basically, frees up a business owner, accounting personnel or HR officer to be able to work on a more strategic set of tasks which affects the bottomline of a business.
How does outsourced payroll processing in UAE work?
A company that offers payroll processing in UAE will process the business’ payroll which involves the gathering of information of staff members e.g. job title and payrate, acquiring the time card data, and calculating the pay that is due to every single staff member. Of course, the outsourced professionals are responsible also in paying the accurate amount to each employee by issuing a payroll check or through direct deposit.
Is company payroll management system considered as a function of the accounting department or the HR?
Payroll functions are under both HR and accounting departments in most organizations. Payroll, as you may already know, is number-driven. It calls for extensive knowledge and expertise on accounting. But, payroll in UAE is also an HR function as it pays people and deals with them. Payroll processing is not an easy task, most especially without the help of professionals. This is one of the reasons why it is often outsourced to reputable payroll specialists in UAE.