Payroll System And Accounting Payroll

One of the responsibilities and duties of business employers is to compensate their employees. Salaries and wages, paycheck, pay slip and payroll- these terms have relations to employee compensation. The first two terms are the terms used to denote to employee compensation while the latter three refer to the documents and papers of the employer-employee transaction.

Paycheck, pay slip and payroll are documents used by business employers to ascertain that salaries and wages have been computed and distributed to employees for the latter’s services and efforts for the former’s businesses. Paycheck refers to the document made by an employer to compensate an employee. Most of the paychecks today are in physical form although the electronic means of receiving paychecks has been increasingly popular.

Pay slip is an employee compensation document which is also known as paycheck stub. It contains the details of the employee’s compensation income information of a certain payroll period including taxes and other deductions.

Payroll is a document listing of employees’ income salaries and wages including deductions and bonuses. It could be in the form of paper sheet or electronic document that contains the listing of the employees including the salary information in a certain payroll period. Nowadays, it has been regarded to be more conventional to store payroll information in electronic means than keeping a compilation of payroll sheets in a physical folder. Payroll software, a helpful tool to record and maintain employee compensation information, has already been used by many businesses.

The payroll system of a business can be simple or complex depending on the size of a business. Smaller businesses may only have fewer employees making their payroll system to be simple. The payroll of a small business can be handled by a business employer.

Larger businesses may

have different sets of employees. It is likely for larger businesses to hire occasional and contractual employees aside from keeping regular ones. Different kind of employee status can mean different treatment of accounting payroll. Because of having a large pool of employees, larger businesses may have to hire personnel to handle the accounting of payroll as well as to keep the employee information. The payroll system of larger enterprises may have to be administered by human resource department and accounting department. The former is responsible for keeping employee information while the latter is tasked for payroll accounting.

Accounting payroll of a business enterprise may involve the use of journals. Payroll journal and disbursement payroll journal can be used to serve as books of payroll accounts. The former is a record of accrued salaries and wages while the latter contains the transaction dates and disbursement information of actual employee compensation. These journals can be in physical form or electronic form. Other businesses may keep two kinds of journal forms for references and possible future utilization. Recording and maintaining of payroll journals are business practices that can be helpful to a business in the short-term and in the long run.

Accounting payroll may seem to be complicated when there is an invocation of employer- employee contribution particularly when the payroll system includes retirement plan contribution. A small business owner or the accounting department of some small businesses and larger companies may have to deal with the accounting payroll which includes accounting of withholding taxes, contributions, insurances and other deductions, bonuses, 13^th month pay and segregation pay during retirement or resignation of an employee. Proper computation of payroll and paycheck of each employee is necessary. It is likely for an employee to demand computation and breakdown of paycheck information. Proper accounting payroll is also necessary for accounting and managerial purposes.

Labor cost is one of the inevitable costs that a business can have particularly to businesses that require more manpower aside from the managerial and technical efforts of business owners. Payroll expense which is the cost of hiring individuals to fill different jobs is a revenue-generating business expenditure.