Before we go in to the details of payroll accounting, let us see what is accounting. Accounting function can be described as the recording of business transactions with an intention of earning profits. Payroll accounting is also a subsidiary function of accounting, which includes confidential information like employee information detailing his salary, taxes and other benefits during a particular period. Companies perform payroll accounting transactions with the help of specialized accountants who are employed to manage the payroll accounts.
Functions of Payroll Accountants
Managing and preparing the payroll of employees is the fundamental task of the payroll department. The payroll department prepares the salary of all the employees. It may include commission and bonuses as well. It should maintain the details of employee names, numbers, hours worked, payments, preparing tax payments on each paycheck, budget accounts and printing of payroll accounts. Payroll accountants manage all payroll taxes for the federal as well as state taxes. For this purpose, payroll accountants review the employee’s W-4 and it will be entered in to the payroll accounts.
The company will be providing many offers to its employees like insurance with respect to medical and dental expenses. This comes as a cost to the company and hence is deducted from each employee’s paycheck. A payroll accountant will make the respective deductions by considering the expenditure of each of the employee and transferring the money to the benefit plans account.
Certain employees need additional withholding amounts for meeting expenses like child support and facilities and student loan repayments. Payroll accounting manages the details of the amount withheld from the employee’s paycheck.
A payroll clearing account is used by certain companies that do not have a direct deposit facility. Payroll clearing account is a kind of bank account that manages the money related to paychecks only. It is the duty of the payroll accountant to ensure that the employee paychecks are issued without any mistakes.
Payroll accountant has to initialize the direct deposits for paying the salaries of employees. Payroll accountants should check the details entered in the payroll file prior to its transfer to the sendee bank. After transfer of funds to the bank, the payroll accountant has to prepare the exception reports. In case if an employee does not receive the paycheck through the bank, he must be paid by paper check or by re-submission.
If you are interested in starting your career as a payroll accountant, these tips will help you gain information about what is accounting and the functions of payroll accounting.