Does bookkeeping include payroll? 

Just like a perfectly balanced dish relies on all the right ingredients, your finances need smooth teamwork between bookkeeping and payroll. Bookkeeping tracks every penny coming in and going out, while payroll makes sure your amazing team gets paid on time and accurately. But if these two aren't working together perfectly, things can get messy. Even a missing ingredient or a wrong measurement is enough for your financial reports to be inaccurate, leading to fines, frustrated employees, and major headaches. 

Today we’ll trip over how bookkeeping and payroll work together. It’s not just about adding up numbers, it’s about connecting all the financial details into a clear, accurate, and legally compliant picture that reflects your business’s financial health.

Is bookkeeping the same as payroll?

Payroll and bookkeeping may first appear to be two distinct industries, each with its own set of duties and difficulties. Bookkeeping, which keeps track of every transaction coming into and going out of your company, is the constant heartbeat of your financial operations. 

On the other hand, payroll is the complex play of numbers that guarantees your workers receive just compensation, have their taxes appropriately deducted, and have their benefits monitored closely.

How do bookkeeping and payroll meet?

Though these two terms are different, they intersect each other on some points. Payroll is an important part of the whole bookkeeping process. The payroll expenditures, which include wages, taxes, and benefits, must be reported in the company's accounts. This guarantees that the financial accounts accurately represent labor costs.

Tracking payroll records:

• Payroll expenditures are categorized in the general ledger as "Wages Expense," "Payroll Taxes," "Employee Benefits," and so on.

• Payroll obligations, such as taxes deducted from employee paychecks, are recorded as liabilities until paid to the appropriate authorities.

• Payroll entries can have an impact on the company's cash flow, which is monitored through the accounting process.

Decoding the relationship between Bookkeeping and Payroll

• Integration of Functions: Bookkeepers are often responsible for recording all financial transactions, which include payroll expenses. This means they manage the flow of funds related to employee wages and benefits, ensuring that all payroll-related transactions are accurately reflected in the business's financial records.

• Compliance and Reporting: Payroll processing requires adherence to various tax regulations. Bookkeepers must ensure that all payroll reports are timely and accurate, which includes withholding the correct amounts for taxes and other deductions. This compliance is crucial for avoiding penalties and ensuring proper reporting to the IRS and state agencies.

• Separation of Services: While many bookkeepers offer payroll services, some may recommend that businesses use specialized payroll services. This is often due to the complexities involved in payroll management, such as changing tax rates and the need for precise calculations.

How frequently should payroll be done and documented in bookkeeping?

Payroll should be handled and documented regularly to guarantee accuracy and legal compliance. The following are the suggested rates for payroll processing and bookkeeping.

• Weekly: payroll processing is common in many firms, particularly in the hospitality and retail industries. This enables regular payments to employees while still maintaining cash flow.

• Biweekly: Many employers handle payroll every two weeks. This timetable strikes a compromise between the necessity for frequent payments and administrative efficiency.

• Monthly: Some organizations choose monthly payroll processing, which can simplify bookkeeping but may not be as responsive to employee requests for timely payments.

What payroll regulations in Florida do you need to be aware of?

In Florida, bookkeepers must be aware of several specific payroll regulations to ensure compliance and effective payroll management. Here are the key regulations and considerations:

What is minimum wage and overtime?

• Minimum Wage: As of now, Florida's minimum wage is $12.00 per hour, set to increase to $13.00 on September 30, 2024. Tipped employees have a minimum wage of $8.98, which will rise to $9.98 on the same date.

• Overtime Pay: Florida adheres to federal overtime rules, requiring employers to pay non-exempt employees 1.5 times their regular rate for hours worked over 40 in a workweek. Correct classification of employees as exempt or non-exempt is critical to avoid compliance violations under the Fair Labor Standards Act (FLSA) .

What about payroll Taxes?

• State Unemployment Tax: Employers are required to pay state unemployment insurance tax (SUTA) on the first $7,000 of each employee's wages. New employers start at a rate of 2.7%, which can vary based on the employer's experience rating after operating for more than 10 quarters.

• Federal Payroll Taxes: In addition to state taxes, employers must withhold federal payroll taxes, including Social Security and Medicare taxes, from employees' wages.

What are recordkeeping requirements?

1. Employee Records: Employers must maintain accurate records of employee information, including names, addresses, Social Security numbers, hours worked, and wages paid. These records must be kept for at least three years as per the FLSA.

2. New Hire Reporting: Florida law mandates that employers report newly hired, re-hired, and temporary employees to the state’s New Hire Reporting Center within 20 days of their start date. This is essential for child support enforcement and fraud prevention.

Pay Frequency and Pay Stubs

• Pay Frequency: Florida does not have specific laws governing how often employees must be paid, but employers should establish a consistent pay schedule to comply with federal regulations.

• Pay Stubs: While Florida does not require employers to provide pay stubs, maintaining detailed records of hours worked and wages paid is essential for compliance with federal law.
  

Final words

Bookkeeping in Florida often includes handling payroll. Bookkeepers help make sure payroll is part of the business’s overall financial management. However, some businesses choose to outsource payroll to experts because it can be complicated to manage.

That’s why many business owners choose to outsource their accounting to third-party bookkeepers. It’s usually more affordable than the expense of keeping a full accounting team in-house, especially for small businesses.

If you are seeking a third-party service that specializes in accounting, taxation, bookkeeping, and payroll, contact us. Over the years, Apex Advisor helped hundreds of clients operate their businesses more efficiently.