Payroll Liabilities - Financial Accounting

Alright, another type of current liability is payroll liabilities

Now we're getting, these are known liabilities. Known liabilities are ones that we know we're going to have to pay and we know how much

we're going to have to pay. So a known liability, one example of that would be, or another example I would say would

be payroll liabilities. Now as we talk about payroll liabilities I want you to understand that there's two sides

to payroll liabilities that you really have to keep up with. Now first I want you to remember we're the business, we're not the employee, we're the business

And so you have to keep up with that side of it and then you're also going to have to keep up with the employer and the employee side

I'll talk about that in a minute. But let's talk about payroll liabilities

Payroll liabilities, these are liabilities and expenses an employer incurs for salaries

and wages earned by an employee from employee benefits and from payroll taxes levied on

the employer. There's a lot of things that go into payroll liabilities

And it's actually kind of, I look at them as three categories if you will

I'm going to show you three videos on this, this is one of them. But before we get into that, I want to make sure that we're in agreeance

our assumptions are made that they're correct. So I want to make sure we go over these things

Salaries, salaries typically refers to a monthly or yearly amount paid to employees whereas wages typically refer to an hourly rate paid to employees So I want to make sure you understand the difference of those as we go forward because you going to hear sometimes both of these or one or the other Another thing I want to make sure you pay attention to or know the difference between is it coming

There it goes. The gross pay. So when I say gross pay, that is the total compensation an employee earns

That is what you truly earn at your job. That is not what you take home on a check, though

That is just what you earn because we all know that the check you bring home is a lot less than what you actually earn

and that is the net pay. The net pay is the gross pay minus all the deductions that they take out of

it. Okay so when it asks for gross pay that's the total amount and when it says net pay that's after

taking out all the deductions. And so and then the last thing I wanted to mention is kind of what I

was alluding to before and that is there's two perspectives that you have to look at this. There

are things that we're going to do remember the business there are things that we're going to have to keep up with from the employee side that the employee has to pay on their own behalf

Those things come out of the employee's check. There are things that the employer is going to

have to pay for on behalf of the employee. Those are the things that the employee, you the employee

will never see come out of your check because the business has to pay for it. And then there's

other things that they choose to pay for on your behalf. We'll talk about those a little bit later

on. So we will be talking about in the next one, we will be talking about it from the employee side

Thank you