What is the Difference Between Payroll Expenses and Payroll Liabilities

If your company is big multinational, it will have surely lots of employees in different branches and department. For proper record of their salaries payment, there will be a separate payroll department. If you are working in this department and your duty is to record payroll, you should know the difference between payroll expenses and payroll liabilities. Here is the list of main differences between these two payroll terms.

1st Basis of Difference : Meaning

Meaning of Payroll Expenses

Payroll expenses represent the total expenses which is paid or to pay to employees in the form of salaries. Employees are the service providers and for their services, they get the salary. Company will record all these expenses in simple category whose name will be payroll expenses. For example in the Govt. Hospital a MBBS doctor will get salary of Rs. 1,00,000. Suppose, there are 10 doctors. Suppose, there are other staff whose salaries is Rs. 20,00,000. Total payroll expense in which Govt. will use his cash will be Rs. 30,00,000.

Meaning of Payroll Liabilities

On the date of payment to employees, all the payroll expenses will convert in payroll liabilities. If company does not pay to employees, it is just loan which we have taken from employees, so it will be our payroll liabilities. We can also say it outstanding liabilities. When we pay payroll liabilities, our cash will decrease and our this payroll liabilities will also decrease by debit payroll liabilities and credit cash.

2nd Basis of Difference : Location in Financial Statement 

Payroll Expenses

On the due date of salary payments, we show all payroll expenses in our account by passing journal entries. In financial statement, it will go to income statement and it will be used to compare with current financial year's income. Both paid and payable payroll expenses will be shown as expense in income statement.

Payroll Liabilities

If on the due date of salary payment, company does not pay, it will become the liability to pay the salary. So, showing this liability, we make balance sheet. In balance sheet, payroll liabilities will show as current liabilities because if this year, we do not pay, it is sure, next year, we will pay all payroll liabilities.

3rd Basis of Difference : TDS and Other Tax

Payroll Expenses

It is the duty of company to cut the TDS and other Tax when it pay the salaries to employees. When payroll expense account will be adjust with these taxation. In these taxation, there may be also included professional tax which is deducted from total salary payment. So, total salary in which include all the deductions will be company's total payroll expense. After adjusting all the deductions, it will be payroll expense payable. When it will paid, it will become payroll expense paid.

Payroll Liabilities

Net payroll expense after adjusting all the TDS and Tax deduction will be our payroll expense, when it is not paid, it will become our payroll liabilities. TDS and All other Tax deductions from total salaries will be also our liabilities but all these liabilities will be under Tax and Duties.

Related : Payroll Journal Entries 






access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
Accounting Education: What is the Difference Between Payroll Expenses and Payroll Liabilities
What is the Difference Between Payroll Expenses and Payroll Liabilities
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at vinod@svtuition.org for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock