Payroll Liabilities Are Rare
Various types of liabilities can occur in large-scale businesses and enterprises. Most of the liabilities are associated with payroll, especially in large organizations. Even if payroll liabilities are rare in your organization, you cannot neglect them because it will disgruntle employees and damage your business’s overall reputation.
Moreover, you and your company can be held accountable for violating payroll rules and regulations. If you want to avoid such issues and run a successful company without liabilities, keep reading this article as it discusses all the important aspects of payroll liabilities and why every company and accounting firm in Malaysia must consider them during the payroll process.
What are Payroll Liabilities?
In most of the organizations, the vast majority of factors do not remain as payroll liabilities for an extended period of time. For example, if your company pays its employees once a month, the liability will not remain for a long time. Similarly, most of the companies set a certain taxation period, which will result in the removal of withheld taxes from the list of payroll liabilities.
Types of Payroll Liabilities
It is the responsibility of every employer to be familiar with the various types of payroll liabilities. They must be taken into account while budgeting to ensure your company does not run out of funds.
Moreover, once you clearly know the amount of money you must pay at a future date, an accounting firm in Malaysia will help you throughout the payroll accounting process and provide reliable HR services.
Here are the three main types of payroll liabilities:
1. Wages
The whole purpose of payroll is to pay your employees, which makes employee wages the most common type of payroll liability. The amount of money that you owe to your employees will be considered a payroll liability as long as you have not paid it to your workers.
2. Taxes
Taxes are a critical part of any payroll system. Accounting firms in Malaysia are familiar with the standard practices and regulations, which helps them in conducting smooth payroll accounting. Various types of taxes, like the state and income tax and other state-related taxes, are withheld by employers. They are considered payroll tax liabilities until you deposit them.
3. Services
Most businesses in Malaysia, especially large-organizations, have to hire an independent accounting firm for payroll and other HR services. The amount of money you have to pay for the accounting firm’s services and software is considered a liability until you pay it. Typically, accounting firms in Malaysia charge on a monthly basis.
There can be many other types of payroll liabilities depending on the company’s location, number of employees, and sector. Some companies have to handle employees’ health insurance and retirement funds as well, which are considered liabilities.
Businesses and accounting firms should always be familiar with the latest guidelines, as they are continually changing. Doing so will help avoid any issues and clear all of the payroll liabilities according to the rules and regulations laid out by the law.
Managing & Paying liabilities
Independent firms can help you in better management of your payroll by creating and maintaining comprehensive records. It is important to ensure that your company is paying the payroll liabilities to the correct recipients. Wages are obviously paid to the employees, while taxes are given to the relevant taxation authorities.
In a Nutshell
Overall, managing payroll liabilities should not be a major issue for any organization. If businesses use a smart, efficient and organized method of payroll accounting, they will start enjoying massive benefits of better management and very few liabilities.
Other than using an effective payroll system, companies should also consider having a considerable amount of cash reserves to cover liabilities in case of a financial crisis. Setting proper reminders, making schedules to pay the liabilities and maintaining thorough records are some of the many ways to facilitate HR services in a company and help avoid payroll liabilities for a long time.
For more information, feel free to get in touch with us.
