5 Steps To Implementing Payroll Accounting For Your Business

By Author: Andrew Bain
Total Articles: 72
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A payroll accounting is the tracking and recording of every payroll transaction. They include all funds given to employees, paychecks withheld from employees, taxes, and other deductions, benefits, contributions, and others.
To begin with, you have to create an accounting chart and other reports from your payroll. Getting the accurate date will give you an accurate system and save you from the trouble of having to adjust or correct your data entries again.
Payroll data is essential and will save you from the stress of having to pay every staff by hand. Here are ways to set up your payroll accounting system.
Organize an account chart
You have to record the payroll of a system. But before doing that, you have to create a payroll account and add it to your accounting list chart. And the best type of account for the job is a liability or expense account.
An expense account is one created from the expenses incurred during the course of the business, such as health insurance. A liability account is one created for funds that you owe. An expense can also be seen as a liability until the payment ...
... is fulfilled.
For instance, if a worker’s compensation is not paid, it is known as an expense when it elapses the time it is supposed to be paid.
Compile the payroll report
After organizing the chart account, now is the time to record all your payroll entries. But before you can enter a transaction detail in the book, you must have done a transaction.
The normal transaction you should enter is the payroll journal entry. It should be created after the actual payroll has been processed so that the details will be in line with the current payroll.
You will also need to gather various valid source dates before entering such information.
Record payroll journal entries
A journal entry is a record that contains all the debit and credit transactions. It includes the debit amount, credit amount, and the effected date.
Most accounting programs do not require you to use journal entries frequently. But if you are using a manual accounting system, you need to make a journal entry.
Post payroll journal entry on the ledger
After entering the journal entries, check them to ensure they are correct before finally writing them on the general ledger. This is because most payroll accounting systems will not allow you to remove the data.
You can review the data you have with those in the payroll system and double-check if you have to.
If possible, it is best to have a second or third eye of employees to review them, preferably an accountant or one who wouldn’t impose any conflict of interest.
Reconcile payroll to the general ledger
The final stage of creating a payroll accounting is to reconcile the payroll. Payroll reconciliation is a sequence where the entire payroll account is checked in the general ledger. It is done to ensure that the record correlates with the information in the payroll system.
The payroll reconciliation process is very detailed and in-depth. Some companies perform it at the end of the month or year.
Performing a monthly reconciliation will give you a lot of time to make any journal correction before closing the record for the month. It also makes it easy to audit the payroll and accomplish research.
Conclusion
If following all the processes of creating a payroll accounting seem rather challenging or difficult, you are not the first. Organizing a payroll is quite challenging, but various accounting programs have made the entire process less complicated. To learn more about establishing payroll accounting for your business, contact a certified accounting professional today.

Managing director of leading Australian cleaning company, Worth Every Cent Cleaning.