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outsourcing payroll paid semi-monthly creates accounting issue
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outsourcing payroll paid semi-monthly creates accounting issue
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We previously did our payroll in house and were paid semi-monthly on the 1st and 15th of the month. However, we have now outsourced our payroll and their system pays on the 15th and end of the month.
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Forums » Topic Forums » General Forum » outsourcing payroll paid semi-monthly creates accounting issue
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outsourcing payroll paid semi-monthly creates accounting issue
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outsourcing payroll paid semi-monthly creates accounting issue
posted at 4/20/2011 2:36 PM EDT
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Posts: 58
First: 10/17/2006 Last: 9/13/2011 |
I am trying to understand why having an extra paycheck in the year is a problem, accounting or otherwise. We pay by-weekly. Most years we have 26 paychecks, but every few years there are 27. Same thing with months (most have only two paychecks, but some will have three). It is not an overpayment, and neither our company including our accounting/finance department nor our employees see it that way. |
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outsourcing payroll paid semi-monthly creates accounting issue
posted at 4/20/2011 3:13 PM EDT
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Posts: 7
First: 4/19/2011 Last: 5/4/2011 |
On paper paying 25 paychecks within a year for a semi-monthly schedule (24 paychecks) it would appear that everyone's yearly pay was raised (as the W2's would reflect the "extra" paycheck.) It is an accounting issue for a company that is trying to make itself look good on paper for potential sellers. The year end reports would show the additional drain of an extra pay period making the numbers for the year look bad. |
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outsourcing payroll paid semi-monthly creates accounting issue
posted at 4/21/2011 7:30 AM EDT
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Posts: 1103
First: 3/16/2007 Last: 8/19/2011 |
In that this is an HR forum I doubt you'll find someone so knowledgeable of GAAP that you will get the answer you want versus the correct answer.
The bottom line is this: Somebody screwed up royally when arranging the outsourcing of payroll. Nuff said on that. You, apparently, are trying to find a solution to a problem and have given your recommendations. Your recommendations, for what ever reason, were not accepted. It is no longer your problem if they don't want to follow your advice. Time to drop the matter and let things fall where they may. Just be prepared to help them fix what is broken later. Thats why we HR types make the big bucks....... |
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outsourcing payroll paid semi-monthly creates accounting issue
posted at 4/27/2011 12:21 PM EDT
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Posts: 2
First: 4/27/2011 Last: 4/27/2011 |
Ok, I'm an Accountant and I am confused with your schedule. All you are doing is swapping out payment on the 1st to payment on the last day of the month. So if you are now paying last day of month vs. the 1st starting on 10/31, then for October forward, payments are now the 15th and last day. BUT in your schedule you only pay on the Dec 15th and NOT on December 31st, so you have just omited on payperiod. As for the Accountants, there problem began in October when there were 3 payperiods vs 2. I am sure they made the appropriate journal entries to make all of this work just fine. |
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outsourcing payroll paid semi-monthly creates accounting issue
posted at 4/27/2011 12:34 PM EDT
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Posts: 2
First: 4/27/2011 Last: 4/27/2011 |
Further to my last post, are you paid to date or behind by half a month?
If you were paying on the 1st for the last half of the previous month, your accountants were already make an entry to accomodate payment on the 1st for previous months work. And now being paid on the 31st they won't have to do that any more. If your payment on the 1st was for the first half of the month (I would think unlikely to pay 2 weeks in advance, but who knows) than your accountants can make an entry to post the 12/31 payroll into the January time frame; something they didn't have to before, but will have to now. Does that help any? |
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