Payroll Accountant Resume Examples for 2024

payroll accounting examples

The debits and credits in your books should always equal each other. If you have the support, it’s a good idea to designate at least one or two other employees as secondary reviewers—someone in accounting or who won’t present a conflict of interest. This will ensure your journal entries have additional eyes on them before they post; it can also be helpful if you’re out on a day that payroll journal entries need to be posted. The accounts that you need to set up to track payroll will generally be an expense account or a liability account. An expense is a cost that you have incurred as a result of doing business, like for wage expense and health insurance.

  • Payroll costs are related to obligations (expenses) assumed by an employer.
  • For example, you’d use a manual entry if you recently promoted an employee or let someone go.
  • However, if you use a manual accounting system, you will need to create journal entries.
  • Typically, employees work for a period of time before you pay them for their work.
  • With the right accounting software, you can set up automatic payments, process individual payments, or integrate with a payroll service.
  • Instead, you’ll create another journal at the end of the quarter when you send Sam’s total withholdings to the government.

First, a proper payroll accounting system will make sure you keep track of your payroll expenses and comply with laws at the same time. Only when you’re sure you’re in line with local, federal, and state laws can you truly have peace of mind running your business. When recording payroll, you’ll generally debit Gross Wage Expense, credit all of the liability accounts, and credit the cash account. Gross Wages will appear on your Profit and Loss or Income Statement, and the liability and cash accounts will be included on your Balance Sheet.

Manual payments

Fringe benefits are sometimes referred to as employee benefits or benefits in kind. Comprehensive coverage for your business, property, and employees. payroll accounting examples If you are looking to outsource Paychex can help you manage HR, payroll, benefits, and more from our industry leading all-in-one solution.

payroll accounting examples

You’ll have to remit the exact amount you credited your cash account with for state and federal taxes. Reverse your payable entries with a debit and decrease the Cash account with a credit. It may seem like there’s a lot of work involved, but it’s not as complex as it sounds.

#3 – Payroll Journal Entry Payroll Taxes Payable

Those estimates will be used to record an accrual-type adjusting entry on the 31st. This is required so that all of the expenses actually occurring during the month are matched with the revenues of the month. Recording wages expense in the proper period is critical for accurate financial statements and therefore a very important part of payroll accounting. The journal entry to record the hourly payroll’s wages and withholdings for the work period of December 18–24 is illustrated in Hourly Payroll Entry #1. In accordance with accrual accounting and the matching principle, the date used to record the hourly payroll is the last day of the work period.

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