What is the difference between payroll and accounting and which is the best for every business?
umm..... pretty much every business that has employees has payroll and all have accounting tasks.
I'm not sure this is the question is what you are meaning to ask. Do you mean separation of duties? And where payroll is processed/what department is responsible and who they report to? To me, it's always better to have two different (at least) set of eyes on payroll processes, money movement, deposits, etc.
But in the end there is no "best" for every business....depends on way too many factors.
Payroll is a narrowly defined subset of accounting (and HR) tasks and accounting is a broad field aimed ultimately at financial statements and tax returns. There is no "best". All companies are required to do both, although small companies call accounting "bookkeeping". Sort of the same thing, although bookkeeping means the company does the initial steps and an outside accountant does the last steps.
There is some overlap between payroll and accounting, but most of payroll has little to do with accounting.
Accounting is the action or process of keeping financial records, and then analyzing, verifying, and reporting the results.
A large aspect of accounting is presenting the information in the form of general-purpose financial statements, such as a balance sheet or income statement.
The reports are often presented to people outside the company and must be prepared in accordance to accepted accounting principles, also called US GAAP.
The most basic meaning of payroll is a company’s list of employees, but is commonly used to refer to
• the action of calculating and distributing paychecks to employees on payday
• the financial records of employees such as salaries, wages. bonuses, withheld taxes, deductions etc.
• the amount of money a company pays its employees
• a company’s department that calculates employees paychecks
In order to run payroll, you need specific information from your employees such as
• a filled out W-4 Form
• if they are hourly, you need to keep track of the hours they worked
• time off
• salary or wages
• overtime pay
• fringe benefits
There are multiple ways to run payroll. The three most common ways are use a payroll accounting, use a payroll software, or do payroll by hand.
Outsourcing payroll to a payroll accounting can free up your time, and the accountant does the entire payroll process for you.
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