Your employees in the organization receive payments through the payroll department. The process of documenting records for employee compensation is known as payroll accounting. The payroll accountant in Broken Arrow, OK, has an influential role in ensuring records are filed correctly so that your employees can receive proper earnings for their completed work. They also enable financial operations to be carried out smoothly.
Understanding payroll accounting
Payroll accounting refers to your organization’s record of an employee’s compensation, including benefits, payroll taxes, and money deducted from wages. Here is a list of information included in the payroll accounting:
- Employee salary, overtime pay, commission, and bonuses
- Employee and employer tax withholdings, including Medicare taxes and unemployment taxes
- Benefits withholding
- Employer benefit costs, such as the cost of administering healthcare benefits, paid sick leave, and more
Setting up the flow of a payroll process
Consider the steps below to set up the flow of a payroll process:
Set up a payroll account
- First, begin by setting up a payroll account for your business.
- Consider your employee’s wages, payment period, fringe benefits, and tax obligations.
- It is best to purchase an automated tool or software for proper accounting. Or, you can even outsource payroll accounting services.
Calculate taxes and other deductions
- Next, prioritize your employee taxes and other significant deductions.
- Input the data in the accounting tool or software for computation and disbursement.
- Withhold the taxes from the employee pay to fund the different types of taxes.
- Include deductions from the salary as payments for health insurance policies and worker’s compensation.
Gather payroll documents
- Ensure your accountant will gather all payroll paperwork and compile all the forms filled and submitted by your employees.
Record payroll liabilities and expenses
- With a proper payroll account in place, your accountant must track all payroll liabilities and expenses.
- Payroll liabilities refer to the costs you pay for hiring and employing workers (employee compensation and taxes)
- While payroll expenses involve all costs involved in your day-to-day payroll operations (the cost of outsourcing a professional accountant and investing in accounting software).
Double-check all payments and transactions
- It is vital to double-check the payroll account.
- Though your automated accounting software can perform accurate calculations, it still requires human interventions and regular audits.
- Your bookkeeper must record your financial transactions, and your accountant must examine, assess, and report your business finances.
- Thus, consider hiring or outsourcing these professionals for your business.
Payroll accounting is integral to the success of your business; it goes beyond paying employees promptly and correctly. It helps in maintaining your financial health. With informed decisions, you can optimize your payroll department. Accurate, effective, and seamless payroll can ensure employee satisfaction and business success.