Good Business is managed to Bookkeeping and Filing Vat Returnby Benny Gala DNS Accountants
What are the types of
payroll accounting journal entries?
Broadly, the types of payroll accounting journal entries are divided into three categories, and it is worth noting that every type is handled differently by an accountant.
· Initial recordings: This is the type which is dealt with by accountants. The salaries, wages, all the withholdings as well as the employment taxes you owe to the government come under this category.
· Accrued wages: Entries to this category include the wages which have not been paid. The amount that you still owe to your employees is recorded under this payroll type. These entries get replaced by initial recordings once the payment has been made.
· Manual Payments: Unexpected entries come up under this payroll category. Whenever you draw a check manually to meet some unforeseen expense like employee terminations, the entry comes up under this category.
Why is payroll
The answer is not very difficult to understand. Payroll accounting is important mainly for the following two reasons:
· Financial records: As mentioned above, payroll accounting ensures that all your expenses on employees, including the payroll tax and everything else, is recorded properly. It ensures that every employee is being paid well and also, that you are not spending unnecessarily on your employees.
· Legislative compliance: The tax laws require you to maintain a proper record of expenses on your employees based on which you are to pay payroll taxes to the government. It is your moral responsibility to pay the correct tax on behalf of your employees which is ensured by the maintenance of payroll accounting.
Thus, here again, we see that these expenses on employees form an important part of the company’s fixed costs and hence, need to be considered while analyzing the performance and profit reports of a company. A company is equally liable to pay the payroll tax to the government and hence, it is necessary to have an account of the number of employees, the money spent on them and other such details for the efficient payment of taxes.
We see that the basics of business include error free bookkeeping, timely and efficient filing of VAT registration and returns and maintenance of a decent payroll account. Payroll accounting is essential to keep track of the wellness and satisfaction of your employees and also to ensure that you are not spending unnecessarily on them. Again, it provides a quick overview of the employee expenses and proves very useful while filing the payroll tax to the government. Along the same lines is the importance of VAT returns. Legally, it is the duty of every company to file for VAT returns every quarter. This not only ensures that the government gets the funds from you that it is short of, but also that you get the extra money paid refunded to your company’s account. Therefore, VAT returns should be filed diligently and timely to ensure that no future problems crop up which will not just impose a heavy penalty on you in case of defaults but also spoil the reputation of your company in the market.
However, the most important aspect of a business is bookkeeping. Without error free bookkeeping, a lot of important tasks will be affected. Not only will it become difficult to keep track of the performance of the company, but it will also become difficult to file for VAT returns without the proper availability of transaction records. Not just this, all the financials of the company will get affected and even a slight carelessness will turn out to be harmful for the company in the long run. As such, each company should ensure that its bookkeeping is efficient, VAT returns are filed timely and the payroll accounting done diligently to avoid most of the major unnecessary legal and financial issues in the future.
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Created on Mar 24th 2018 03:44. Viewed 1,076 times.