Payroll accounting and understanding the basic accounting entries is a crucial part of accounting and not just accounting in itself, also for your business. 

Salaries are what comprise of your business most probably – either you’re providing services when salaries are a considerable part of your expenses or you’re producing something which means that those salaries involved in the process should be included within the price of the items produced. Salaries are paid to people and people are those who help you earn money. Salaries and all related expenses (i.e. taxes) should thus be accounted on proper determined accounts to understand the expenses incurred in relation to those people. It’s important to understand the amounts to analyze your results, to understand how much people are costing for your business.

Ensuring that you’re accounting for your salaries accurately ensures that you also recognize your payable from the process, including payables to the employee, but also to the authorities when it comes to taxes. When paying salaries it’s important to ensure that all relevant taxes are paid. It’s not good for anyone if you end up with inaccurate tax reports and unpaid taxes. There will be fines, unhappy employees and bad publicity.