Payroll Accounting — Core Concepts
Eight topics covering the full payroll cycle from gross pay to government remittance. Click any card to expand.
Payroll accounting records all compensation paid to employees — wages, salaries, and bonuses — as well as the deductions withheld from employees and the payroll taxes owed by the employer. Accurate payroll is critical for:
- Legal compliance — late or incorrect payroll tax deposits trigger IRS penalties.
- Employee morale — employees expect accurate, timely pay.
- Financial reporting — payroll is often the largest expense for service businesses.
Employee Costs
Gross pay (wages/salary) — the total earned before any deductions. The employer withholds taxes and deductions on the employee's behalf.
Employer Costs
Matching FICA taxes + unemployment taxes (FUTA + SUTA). These are the employer's own payroll tax obligations — they do NOT come out of the employee's check.
The Employer as Government Agent
The employer acts as an agent of the government — collecting taxes from employees' paychecks and remitting them to the IRS and state agencies on a schedule. Failure to remit on time results in penalties of up to 15% of the unpaid amount.
Ready to test your knowledge?
Switch to Practice Exercises — choose a subcategory and generate problems at your difficulty level.