Why is payroll accounting important? | FAQs
An organisation that strives for effective business and office administration, and hopes to master tax law, need professionals within their company who have a focus on the importance of payroll accounting.
Watch this video featuring the Head Tutor on the University of Cape Town Payroll and Tax Law online short course, Gareth Cotten, to find out exactly why payroll accounting is important for your professional success and why you should consider a course in payroll from a financial management perspective.
Payroll accounting is important for 2 reasons: financial management and legislation compliance. Financially, payroll accounting helps ensure a company pays its employee correctly. This includes making sure employees receive the correct remuneration, and monitoring payroll expenditure to ensure that the organisation is not wasting money unnecessarily.
Legally, your organisation needs to adhere to best tax practices. It’s a business’s responsibility to report employee salaries to SARS and pay the correct tax on behalf of their employees. This is done so that SARS can cross check the tax they’ve collected from each employee with the tax they’re owed at the end of the tax year.
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Study the University of Cape Town Payroll and Tax Administration online short course.
Payroll accounting is important, one, from a financial management perspective but also from a legislative and technical perspective. So financially you want to check that you are paying people the correct amounts and that people are being compensated the right way and that the business is not overspending money the incorrect way. From a legislative perspective you will generally need to report to the Treasury or to SARS in this case, what you are actually paying your staff, so that they can track tax and payroll deductions correctly and then they can then match those up with tax returns for the business and for the individuals being paid.