Payroll accounting involves the calculation and distribution of salaries, wages, and withholdings to certain agencies and company staff. It also involves issuing reports to company management, so they’re informed regarding company labor costs and payroll expenses.
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The primary kinds of journal entries for payroll are as follows:
Read More : Top 10 Benefits of Outsourcing Accounting and Payroll Services.
We’ll take a more in-depth look at the key journal entry types for payroll below.
A primary journal entry for payroll may be recorded in the general ledger or payroll journal. The entry may include debits for salaries and direct labor expenses. There may also be credits to accounts with each one giving full details of liabilities that haven’t been paid and the amount that has already been paid to all employees as net pay.
There may be different employee deductions that are included in this particular payroll journal entry such as repayment for advances, pension plans, life insurance, and vision insurance.
It’s quite common for companies to have unpaid wages by the end of each accounting period. This expense must be accrued if it’s material. This payroll entry is simpler compared to the comprehensive primary entry as it’ll be a single expense. Once the entry is recorded, it can be reversed at the start of the next accounting period. It is then recorded as an actual payroll expense.
It’s quite common for a business to print manual paychecks as either employee were short=paid in a preceding payroll or the company fired or laid-off employees. The business is obligated in paying the employees prior to the next scheduled payroll. The check can be settled through the accounts payable account of the company rather than the payroll account. If so, then there is a need to make an entry through the corporate accounts payable. If you’re recording it into the payroll journal or general ledger directly, then the same items may be used in noting primary journal entry.
Oftentimes, businesses in UAE outsource payroll accounting to a specialized firm. A firm specializing in company payroll processing can perform critical HR functions such as payroll management for a lower cost compared to processing payroll in-house.
There are a couple of major job functions payroll service providers perform throughout an entire year, and that include:
Read More : Importance of Payroll Accounting Services.
Outsourcing payroll is a way for business owners to think ahead. Payroll-related tasks are complicated and they become quickly overwhelming for entrepreneurs to handle on their own, especially without the required skills and expertise. Fortunately, payroll outsourcing service providers offer capabilities that are beyond what an organization is able to do in-house. By outsourcing payroll processing, you will have peace of mind, as well as more time in developing and growing your business. This ultimately saves you money and reduces the risks of acquiring fines and penalties for improper payroll recording and late payments to employees.
If you’re ready to talk about payroll processing, call us today as we can answer all your payroll-related concerns.
Outsourcing payroll allows an employer to concentrate fully on core business activities. Additionally, it frees up the entrepreneur or accounting personnel in order to focus on working on more strategic tasks that affect the bottom line of the business.
Payroll outsourcing is the shifting of the responsibility of processing payroll and disbursing wages of employees to a specialized team dedicated to payroll. This is typically done in order to save costs and time that are associated with having a team of experts back the company for a crucial task such as payroll management.
Payroll functions are handled by human resource and finance departments in most businesses. Payroll is driven by numbers and calls for expertise between accounting and labor legislation. Payroll is also an HR service as it’s dealing with people.