The terms “accounting” and “payroll” are often interchanged in a business. “Accounting” is a term used to describe the part of the business that handles all financial transactions and cash flows of the business. “Payroll” is the action of preparing the employees' paychecks, which is a single task of the entire accounting department. Accounting and payroll have two separate functions and objectives in a business, which must be defined to have a functional accounting department.
The function of the accounting department is to track and maintain the money coming in and out of a business. The department is responsible for recording all transactions to track expenses and purchases, keep financial records and write financial reports, perform audits within the business when required, and preparing the company for tax time. The accounting department manager must report accounting issues or budgeting problems with the board of executives, especially if the budget affects product development or individual projects currently active.
The accounting department will have a set of objectives the employees work toward. Common accounting objectives include handling the payroll of the company’s employees, tracking all purchases made to operate the business, tracking all sales and income statements, examining financial reports to reduce the number of financial mistakes and handling the company’s various financial budgets.
Handling and preparing the payroll for the business’ employees is just one task of the accounting department. Payroll is the act of preparing the salary of all working employees in the business. This also includes bonus payments and commission from sales. The accounting employee must add up the total hours worked for each employee and multiply the amount by the hourly wage the employees are receiving. This should be done twice a month, so the employees’ wages are on time.
The employee who handles the payroll tasks in an accounting department must follow specific procedures and must work toward set objectives. Common payroll objectives include maintaining the employees’ hours and payments, calculating commissions and bonuses, prepare tax payments for each paycheck, and print payroll reports for the master budget and expense budget. These budgets are prepared by the accounting department for the business owner or board of executives.