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