Introduction to Payroll - Labour Cost, Cost Accounting Video Lecture | Cost Accounting - B Com

South Pacific software/services presents
an introduction to payroll for any
business no matter small medium or large
happy employees are key for business
growth and development payday is an
important day in the lives of all your
employees it is essential that employees
are paid accurately and on time in order
to pay your employees accurately it is
very important to make the right
the right allowances and contribute to
superannuation if necessary this is
vital for not just your employees but
also for your own taxes and overall
financial health without the right tools
and knowledge this payroll process can
feel complex difficult and seemingly
impossible don't worry though we're here
to help in order to master your payroll
and keep your employees happy you need
to understand how it all works over the
next few minutes we're going to
introduce you to the basic concepts
surrounding payroll and give you a brief
step-by-step guide to how it all works
here we go
I would like you to meet Joe your newest
employee let's jump ahead in the future
to Joe's first payday it's a Friday
afternoon and Joe has just received his
fortnightly wage let's say that today
Joe is receiving 800 kina how did that
number get calculated well there are
several factors that go into calculating
the final total for Joe's wage the money
you receive is not just your hourly or
salaried amount but also includes
various allowances deductions and your
contribution to their superannuation
fund if necessary what is an allowance
allowances are any additional amount
given to an employee from their employer
for work-related expenses an example of
an allowance is when an employer gives
petrol money or a petrol allowance to an
employee when they use their vehicle for
work-related activities allowances can
be tricky
some are included in wage and some are
paid to a third party such as school
fees or rent if your allowances are paid
to a third party then they'll be sent
directly to the third parties bank
accounts some allowances affect taxes
and some don't
allowances before tax are included in
the employees taxable pay these
allowances usually represent some form
of additional pay as compensation for
working conditions or for a special
skill taxable allowances are usually
included in the gross salary column on
the tax certificate for PA ye deduction
certificate
an example of a taxable allowance is a
uniform allowance a first aid allowance
or a leading hand allowance allowances
that are not taxed are referred to as
after-tax in your attache you will need
to select after-tax if you're not going
to tax this allowance allowances after
tax are included in the employees gross
pay but they're not included in their
taxable pay these allowances usually
represent expenses that could be claimed
by the employee as tax deductions
non-taxable allowances are usually shown
in the allowance column on the tax
certificate or PA ye deduction
certificate examples of after-tax
allowances are car allowances overtime
meal allowance and a living away from
home allowance what is a deduction on
top of allowances you also have
deductions a deduction is any amount of
money taken from your wage for various
reasons for example a deduction an
employee might have is if they decide to
take out a loan from their company when
they're paying the loan back a loan
deduction will be made from their wage
every fortnight same as allowances some
deductions affect taxes and some do not
an example of a deduction that would not
have a tax is a repayment of a company
loan or repayment of company expenses as
in this deduction has nothing to do with
the employees wages another example
would be breakages for example if an
employee breaks a computer screen other
equipment or furniture in the office
they may be subject to a breakage
deduction
it's important to note that few
deductions are before taxes same as with
allowances you need to select after tax
in attache if the deduction is not to
affect the calculation of tax deductions
after tax do not affect the employees
gross or taxable pay they are simply
subtracted from the employee's net pay
this would be the normal selection for
most deductions a salary sacrifice
though would normally be taxed so when
you're looking at your wage here is what
you're seeing you see your wage or
ammount earned for your work plus all of
the allowances taxable or not - all the
deductions taxable or not now that you
understand the concepts of allowances
and deductions your payroll will make a
lot more sense
in order to really understand how
payroll works you need to fully
understand the following things
superannuation contribution holiday pay
leave money and work cover
in addition to allowances and deductions
we also get the employers contribution
to our superannuation superannuation is
also known as a retirement fund
employees pay super as a deduction and
this money although it is paid to an
external super fund is still ours one
way or another we or our survivors get
this money back every single employee
knows how important their super is so
it's very important when doing the
payroll that you do to employers also
pay super which does not affect the
employees wage the money and employee
pays to their super fund is joined with
the money and employer pays to that same
fund employers also pay for sick leave
maternity leave where applicable and
study leave where applicable we also get
credit for holiday pay which is our
money whenever we claim it by holiday or
leaving the company and we also get long
service leave money held for us if we
work for any company long enough and
finally we're also insured by our
company in Australia this is called work
cover work cover helps us if we have an
accident at work work cover makes our
company pay up if we're hurt or injured
on the job now we have our money what
information goes where usually here's
where things go your net wages will go
to your bank account or bank accounts or
cash deductions will go against whatever
they were for say a company loan you
took or free cleaning your uniforms as
we mentioned previously your
superannuation both what you contribute
as an employee and what your
openi contributes as an employer goes to
the superannuation company your taxes
withheld will be sent to the tax office
your pay slip will be given to you or
emailed to you records of exactly what
has happened will flow through the
company's general ledger so that
everything gets tracked correctly for
more information about the general
ledger check out spss is general ledger
video you're probably starting to see
that payroll is not exactly a simple
process is it while it may be complex it
is essential for your business that your
payroll is running accurately and
efficiently once you know what you're
doing and everything is accounted for
your employees get to walk away happy
with their wages in hand an important
thing to think about is that as a
payroll officer when you do your job
correctly you are truly the most
important person at the company we've
come to the end of our video we hope
we've helped you better understand how
payroll works for more information about
payroll the general ledger or attache
accounting and payroll software please
do not hesitate to contact us at south
pacific software services