How to prepare and maintain payroll accounting? Payroll accounting and pay slip methods Author: Ckrishwa
Payroll accounting is an important aspect in any business or company. Number of employees is not the matter whether big or small every company or business has to maintain pay roll accounting.
Payroll accounting is an essential part of a company or business. Unless otherwise if a company or business don't have any effective payroll system there we cannot expect integrity among the employees and loyalty of the employees towards the business owner or company.
Any payroll accounting should contain two sides. One is payment and another one is deduction. In the payment aspect in payroll accounting the following are the essential aspects to be included.
1, Name of the employee:
2, Employee Identification number:
3, Department: Department in which the employee is working. This will be applicable to large organization where employees may work in different branches or sections like marketing, accounting, sales etc.
4, Basic Pay:
5, Allowances: Allowances like uniform allowance, conveyance allowance, winter allowance, summer allowance etc., this will differ from company to company.
6, Gross Payment or salary:
In the deduction aspect of pay roll accounting the following are the important aspects to be included.
Provident Fund Deduction: This type of deduction is sometimes mandatory by the Government for the purpose of providing monetary relief after the employee is retired or left from the service.
Advance recovery: This type of deduction will be applicable in the cases where the employee has availed any loan with the company or business. Normal loans that are being sanctioned to the employees are festival advance, winter advance, summer advance, house construction advance, vehicle or conveyance advance etc.
There may be some other deductions from the pay of the employees if the company has any right or order to recover from the employees in their salary.
Normally payrolls are prepared on monthly basis mostly by the end of the month and the employees are paid salary on the last working day of the month. If the last working day of the month happens to be a holiday, the salary is mostly paid on the previous day of the last working day.
Most of the organization or company is producing pay slips to their employees with their pay check. Every employee will get their pay slip with their pay check.
Pay slip is an extract of the employee�s salary recorded in the payroll. Pay slip is the replica of the entry recorded in the payroll.
Pay slip will contain all the essential details like employee's name, employee identification number, department in which the employee is working, gross pay, allowances, gross pay, deductions, net salary or pay with the signature of the authorized authority to sign the pay slip.
Separate payroll accounts should be maintained for watching the advances paid to the employees and other deductions from the employees or payroll.
Individual advance register has to be maintained for sanction of employees advance like festival advance, winter advance, summer advance, house construction advance, vehicle or conveyance advance and also for adjusting the advances from the employees.
Only if the advances register is properly maintained and watched then only the company can know how much advance is sanctioned to whom and how much advance has been recovered from whom and how much advance is to recovered from whom. Some recurring advances like festival advance or any other advance may not be sanctioned to the employees unless the previous advance has been adjusted or cleared.
Staff welfare deductions like provident fund are also part of the payroll processing. Separate accounts should be maintained for the provident fund deductions and remittances to the Government or to the appropriate authority.
Provident fund accounts should contain all the essential details like employee name, identification number, department, how much amount has been recovered, how much has been remitted to the Government or to the appropriate authority.
Payroll and other supplement records like advances accounts, staff welfare deduction accounts are the important records for the company or business and also to the employees.
Payroll is the authenticated record for the business or company to know how much employees were worked in a particular period of time and how much amount has been spent for the purpose of salaries to the employees.
Payroll accounting is an essential record if there is a dispute between the employee and the business or company and may be considered as a valid record in case of litigation.
