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Did you know that almost 40% of small businesses don’t have an in-house accountant?
Simply put, it’s not always necessary to have an in-house accountant. However, professional tax and accounting solutions are still essential. By using them, you can work your way through a variety of complicated matters, such as payroll liabilities and payroll expenses.
Are you unsure about payroll liabilities vs payroll expenses? Keep reading to learn all about the differences.
Have you ever asked yourself, “What are payroll liabilities?” Put in the simplest terms possible, payroll liability is what you owe your employees at a given time. The number corresponds to wages and goes away every time you pay them before accruing again.
The key is to avoid building up too many liabilities over an extended period. Any payroll liabilities guide will explain that payroll liability can be recorded through crediting payroll liability. For instance, if you pay your employees bi-monthly, then you can credit that payroll on the next payment.
This is due to the fact that money subtracted from a given employee’s gross pay is often owed to a third party. This can include the payroll administrator, the city, or even the federal government.
This is something an accountant can handle with ease. Just be sure to find someone who has the necessary skills and qualities.
You should always record payroll expenses on the relevant payroll expense account, including payroll tax expenses as well. This amount is always gross. Only after you subtract everything you owe to third parties will you get a net pay that’s given to your employees.
The most reliable payroll expenses guide classifies payroll deductions as liabilities. As long as those liabilities are paid off, you won’t have anything to worry about.
Where Can I Get Services That Handle These Responsibilities?
The key is to seek out accounting services that can sort everything out in a detailed and careful manner. The last thing you’d want to do is damage control because of a costly mistake.
You can still save on overhead by outsourcing these services. You should never feel pressured to hire an in-house accountant like most small businesses. In fact, more and more businesses are becoming familiar with the many benefits of remote and virtual services versus in-house ones.
Now You Know the Differences Between Payroll Liabilities Vs Payroll Expenses
Now that you’ve learned all about the differences between payroll liabilities vs payroll expenses, you can tackle these tasks without getting things mixed up. Even a single accounting mistake can snowball into something disastrous so it’s crucial to stay as informed as possible.
Sterling Tax & Accounting can provide you with the professional solutions your business needs. We handle bookkeeping, tax planning, virtual CFO services, and more. We aim to help you keep overhead low while also leveling up your financial capabilities.
Feel free to contact us and schedule an appointment that works with your schedule.
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