What is payroll?, Accounting Basics

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Payroll implies with paying your employees (having seeing that the government gets the monies they require you to withhold from the employees and the payroll taxes they needs you to pay).

If you have occasional employees, or even one or two full- or part-time, you can get by recording the payroll transactions in the universal Journal. The typical transaction is , where have who you paid and the hours they worked. Labor-expense, withholding, accrued-taxes, and tax-expense have multiple accounts as we'll get into below.

If you have more than a couple of employees it definitely pays to set up a Payroll system.

A Payroll system includes a Payroll Journal - in which payroll is accrued, i.e., held in an "owed" state (like an open vendor invoice) until paid, and a Payroll Disbursements Journal - in which the real payments to the employees are recorded.

 


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