How do you keep payroll records?

How do you keep payroll records?

Payroll accounting record pdf

Payrolls are a basic document of any business that has hired workers. In previous posts we have already told you how to read and understand your payroll as an employee, today we go to the other side and tell you everything you need to know to create a payroll step by step.

Normally companies have a person or an entire department whose function is exclusively to calculate and make the payroll of all workers, but if you are an entrepreneur who has just started your business and you must do all this work yourself, pay attention to the key concepts that we present below to calculate and create the payroll of your employees.

Although you surely already know what a payroll consists of, it never hurts to review basic concepts. The payroll is the document that employees receive from the company each month and which specifies the salary they have received that month for the work performed or their salary compensation.

But the payroll is much more than that, it is an invoice in which the relationship between company and employee is reflected and in which very important data appear to take into account for the employee as the contribution of the worker to the Social Security or the IRPF retention that is applied to him.

How is payroll accounted for in Colombia?

For the payroll accounting, we will use the values determined in the payroll run, which we assume yields the data shown below. In this example, we assume that the employee belongs to the administrative area, so account 51 of the Colombian single chart of accounts will be used.

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How are social security payments accounted for?

As mentioned above, the employee’s social security contributions are deducted from the salary and are recorded in liabilities as payroll withholdings.

What is the legal basis for the payroll?

Payroll is an obligation established in three Mexican laws: Ley Federal del Trabajo (Federal Labor Law), Article 804, Section II. Federal Tax Code, in Article 67. Mexican Social Security Law, in Article 15.

Payroll accounting record example

When receiving the payroll, you must pay attention to several aspects, starting with its organization. The structure of the payroll consists of: company identification data, employee data, settlement period, payments, deductions, contribution bases, liquid to be received and place of issue, signature and stamp of the company and the employee.

What is payroll portability? In Mexico, payroll portability is defined by Banco de México as “an alternative available to the employee so that his or her wages can be deposited in an account in another bank without the authorization of the employer and without the employee having to pay commissions. For this purpose, it is sufficient for the employee to make a request, either to the receiving bank (where he/she wants his/her remunerations to be deposited) so that said bank carries out the corresponding procedure in his/her name, or to the ordering bank (where his/her employer deposits or disperses him/her) so that he/she may transfer his/her remunerations to the bank of his/her choice”.

When is a payroll posted?

When do payrolls have to be accounted for? Payrolls, like other company expenses, must be accounted for when they are accrued. The accrual principle is one of the accounting principles governing company accounting.

How is the social security of an independent person accounted for?

Law 1955 of 2019 in its article 244, states that any self-employed worker who obtains monthly net income equal to or greater than one minimum wage must contribute to social security on 40% of the monthly income.

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What is the workers’ social security contribution?

1. – 1.55% for contracts of indefinite duration and 1.60% for fixed-term contracts. 6.70% for workers with a full-time temporary contract. 7.70% for workers with a part-time temporary contract or fixed-term contract through a temporary employment agency.

Payroll Registration

If you have not yet incorporated payroll journal entry accounting in your business, in this article we will guide you step by step through this process, and explain in a simple way what it consists of and why it is so important for the health of your project.

In accounting, a payroll journal entry is the set of entries that are entered in the accounting journal. In other words, in the document that contains all the financial activity of the company, all the compensation, profit and tax data of the employees are recorded and filed. Its purpose is to record the operations that are generated in the company’s accounts, and through these data, it is possible to analyze the composition of the company’s assets over time.

On the other hand, the payroll accounting entry is one of the types of entries with which we can measure the economy of a company, since all the transactions and the total cash flow are summarized here.

Generally speaking, this process is about inserting relevant information in the company’s general ledger. Here, all assets and liabilities must be recorded for financial and compliance purposes. As for employee compensation, it should be recorded:

How is the payment of wages and salaries recorded?

Wages and salaries (640)

This account includes the fixed and sporadic remunerations that your company pays to its employees. These remunerations refer to the full amount that, by right, is owed to the employee, with the exception of expenses generated by a business trip.

What are payroll deductions?

The payment is any amount, either in cash or in kind, that the employee receives from the employer. This is independent of the cause that generates the payment, but it must always be specified in the payroll receipt.

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How is payroll performed?

It is made by adding the base salary, the salary supplements subject to contribution and the pro rata of overtime payments. This calculation does not include the amount of overtime. Contribution for overtime. The payment derived from the fulfillment of normal overtime.

Example of a payroll accounting entry in colombia

Payroll[1] is the sum of the financial records of employees’ salaries, including wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for the services they rendered during a certain period of time.

Payroll is crucial because payroll taxes, and payroll itself, significantly affect the net income of most businesses, and are subject to laws and regulations (e.g., payroll in the U.S. is subject to federal and state regulations). Starting with ethics from a business standpoint, it is critical that employees respond to payroll errors and irregularities with questions. Good employee morale requires timely and accurate payroll. The primary mission of the payroll department is to ensure that all employees are paid promptly and accurately, with correct withholdings and deductions, ensuring that withholdings and deductions are remitted in a timely manner. This includes the timely payment of wages, withholding taxes, and deductions.