Payroll Cycle
Definition
The recurring end-to-end process of collecting time and pay data, calculating wages and deductions, paying employees, and filing the related tax reports for each pay period.
Related Terms in Payroll
Statutory Bonus
A bonus certain Indian employers must pay eligible employees under the Payment of Bonus Act, calculated within prescribed minimum and maximum percentages on qualifying wages.
Labour Welfare Fund (LWF)
A state-administered fund in several Indian states to which small periodic contributions are made by employees and employers, funding welfare measures for workers. Rates and applicability vary by state.
Payroll Liabilities
Amounts owed as a result of running payroll but not yet paid out: net wages, income tax withheld, social-security and pension contributions, and any garnishments. They are liabilities held on behalf of employees and agencies, not business expenses in their own right.
Payroll Journal Entry
The entry recording a pay run, debiting gross wages and employer contributions to expense and crediting net pay plus each withholding and contribution liability. Settling those liabilities later is a separate entry that clears them to zero.
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