Accounting and Payroll

What is accounting?

Accounting is a field or discipline that pertains to that science of economics which aims to classify, record and summarize financial activity of a business, so as to enable decision-making in those businesses. In simple terms, it can provide a “snapshot” of the business’ condition in economic terms, which quickly tells us the current situation of the business, its stability and also its financial capacity.

Accounting has long been present in human history. Currently accounting has evolved significantly and is based on remarkable and complex systems set up by the various companies. Moreover, this discipline has increasingly become specialized and more complex.
Accounting aims, firstly, to provide information to shareholders owners, banks, managers and all those who are related to the company. From the above follows the importance of the practice of accounting in a particular business.

Every business needs to keep track of all economic performances, otherwise it would fall into chaos and disorder and would most likely not have a very productive development.

In a company two types of accounting are a must, management accounting and financial accounting. The first one is related to the needs or tastes of the company and by contrast, financial accounting is responsible for accounting for the financial growth and obligations of the business. For expert advice and management of your financial accounting, you should reach out to a professional such as Wilks CPA

What is a payroll?

  • Payroll is defined as the set of all expenses related to the total gross remuneration of wages. However, according to various sectors, “the wage” is defined differently.
  • It is a list of all workers who will be remunerated for the services that they will provide to the employer.
  • It is the instrument that allows in an orderly manner, making payment of salaries or wages to workers as well as provide information on accounting and statistics, both for the company and for the agency in charge of regulating labor relations.
    The contents of the payroll are based on the contents of the contract of work, in relation to the service to be provided and remuneration.

Payroll Design

According to the size of the company, one must design the model of an appropriate payroll. Payroll substantially changes from one business to the other, and is subject to changes in allowances and deductions determined by business necessity. Wilks CPA can help you decide what the best payroll structure is for your business.

Types of Payroll

  • Manual Payroll
    In this kind, calculations are made entirely by hand and is used in businesses of small or medium capacity.
  • Computerized Payroll
    It is made by a computer, which allows, usually through encodings, to automatically calculate both contributions and deductions made in the pay period. To operate this type of payroll you must create the following types of information:Payments: Salary or wages, Bonus assistance, Overtime, Substitutions, Holidays, Commissions, Day of rest, Bonus nights, Overtime on holidays, Paid leave.Deductions: Social Security, Income tax, Box of savings, Hospitalization insurance, Housing policy, Dining, Commercial credit.

How to make the payroll?

The process of preparing the payroll starts each time a pay period starts. The design of the format in which the list is made varies according to the size and other characteristics of the business.

Standards of Control for Payroll

The rules of internal control that will be cited below represent a guarantee for the company, that the resources allocated to monetary management of personnel are being properly distributed.

  • The payroll must be approved by authorized persons.
  • Hiring or layoffs should be immediately reported to the payroll department.
  • Time to be paid to each worker must be approved by the respective department head.
  • Calculations made on the payroll should be checked before paying workers.
  • Each employee, upon receiving their remuneration must sign a receipt.
  • The payroll should be periodically monitored by an independent officer of the payroll department.
  • Unclaimed wages must be guarded by a person different from the one who prepares the payroll or makes payments.

The importance of accounting goes beyond simple recording and subsequent data representation. It is a key tool for sound financial operation of a company and is a key tool in the management and decision making in organizations of today.

Enough has been said about the payroll and its importance in financial accounting of a company. It has a special place among other tools of financial accounting for every business.
If your business needs assistance with its accounting and payroll, look no further!

Call Andy Wilks CPA at (405) 670-3150