Payroll accounting is the bridge between running payroll and keeping the books. It turns each pay run into the debits and credits that record the cost of pay and the liabilities it creates.
What it means
A pay run produces more than payslips: it generates an accounting effect. The salary cost is an expense, the PAYE, UIF, SDL and fund amounts are liabilities owed until paid, and the net pay is a liability until the bank transfer clears. Payroll accounting captures all of this so the financial statements reflect the true cost and obligations of employment.
Where it fits in
The payroll journal is the main output: a set of journal entries posted to the general ledger after each run. The liability accounts hold what is owed to SARS and the funds until the payments reverse them, which is why the books carry payroll liability or control accounts between the run and the payment dates.
Key rules
- Records the expense and liabilities each pay run creates.
- Posts through the payroll journal into the general ledger.
- Statutory and fund amounts sit in liability accounts until paid over.
- Keeps the financial statements reflecting the real cost of employment.
