The process of calculating, managing, recording, and analyzing employee’s compensation is called payroll accounting. All the employees of an organization receive their payments through the payroll department. It is the responsibility of payroll accountants to make sure records are filed correctly, so that the employees can receive proper earnings for the work completed and that financial operations are being carried out fluently.

2. The process of calculating, managing, recording and analyzing
employee’s compensation is called payroll accounting. All the
employees of an organization receive their payments through the
payroll department. It is the responsibility of payroll accountants
to make sure records are filed correctly, so that the employees can
receive proper earnings for the work completed and that financial
operations are being carried out fluently.

3. Payroll accounting also includes reconciling for benefits, and
withholding taxes and deductions related to compensation. The
calculation of payroll is highly influenced by the legal
requirements of each country (it may also depend on state or local
city requirements). Payroll accountants use financial journal
entries to summarize an organization's transactions and total cash
flow. Payroll entries fall under the scope of general ledger that
sorts all financial information. After documenting all the payroll
information, this data can be pulled by human resources and sent
to their managers to add it to employee’s performance evaluation.

4. Payroll accountants need to apply their knowledge and skills to
explicitly insert relevant information into the ledger, including all
the expenses, liabilities and assets, for financial and compliance
purposes. Below is a list of what should be added when
documenting employee compensation:
• Gross wages, salaries, bonuses and commissions
• Withholding employer and employee taxes
• Withholding of salary, insurance premiums and savings plans
• Employer fringe benefits' expenses

5. Payroll costs are related to obligations (expenses) assumed by an
employer. The sum of all the concepts listed above forms the
accrued expense for keeping an employee on the payroll. All the
accrued expenses must meet the matching principle under
accounting principles. The matching principle states that all
expenses need to match in the period when all the related
revenues are reported. For instance, an employee is hired on the
first day of January but paid on the first week of February, the
expense related to the labor of the employee must be recognized
in December. It is to be noted here that if the labor of employees
served for manufacturing a product or asset, the compensation
(including provisions) should be registered as cost of
manufacturing the product (inventory) or asset and recognized as
expense when the inventory is sold (through cost of sales), or the
asset is used (through amortization).

6. Performance obligations under payroll accounting are related to
withholdings or deductions from employees’ wages that are not
directly paid to employees, but are usually paid later to
government institutions or private companies. The most common
withholdings according to US laws are:
• Federal withholdings: Retentions for federal income taxes
• State withholdings: Retentions for state income taxes
• FICA payable: Retentions for Social Security and Medicare
• State disability: State disability taxes
• Employee health insurance: Retentions for health insurance
coverage
• 401K: Retentions for retirement savings
• Court ordered withholdings

7. Before the hiring process, there are some important requirements
in accordance with US federal legislation and may vary from state
to state, that employers must fulfill.
Federal Employer Identification Number (EIN): A company must
get an EIN from the IRS which is used to track federal tax
payments.
Payment type and periodicity: After determining the salary level
according to position and experience, and payment type i.e.
hourly or annual wage, it comes to the selection of period in
which the employee is going to be paid i.e. weekly, bi-weekly or
monthly. Payment periods should not be longer than the monthly
basis.

8. Benefits and insurance: Some of the employee benefits that are
mandated by federal or state lay include, minimum wage,
overtime, leave under the Family Medical Leave Act,
unemployment and workers’ compensation and disability
insurance. Apart from these, there are benefits offered by
employers such as insurance or a 401K retirement plan.
Employees’ forms: It is important for employers to gather all the
information related to right to work in the US and the personal
information of an employee while hiring. The most important
forms are I-9 Form, which is to verify if the employee has the
citizenship or right to work in the US under a work permit, W-4
Form, which includes the employees’ personal information to
calculate the withholding applicable to an employee and Direct
Deposit Form.

9. An essential part of payroll accounting is a centralized software
system that save an employer a lot of time in all the steps of the
process including submitting necessary payment and forms
electronically, and can also send reminders about the approaching
deadlines.
Implementing a Charts of Account list to set up the documentation
of the organization’s financial transaction is helpful. Employers can
directly account for expenses and liabilities using that included and
can delineate expenses by subtracting the withheld amount or
eligible for taxation. The net pay of an employee can be extracted by
subtracting all the deductions from the gross pay. The aggregated
figure gives the government and the employer a number of how
much they will receive per paycheck. All the essential documents
required by local, state and federal law must be retained in case of
an audit

10. Dealing with payroll is complicated. From cloud-based systems to
tax and regulatory issues, there's a lot that a payroll coordinator or
specialist needs to know. To make sure your employees have the
proficiency necessary to process payroll efficiently and accurately,
you need to get them through a professional payroll training
program and payroll accounting courses that can help them attain
their knowledge and standardized approach and boost their
productivity.
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