Can Salaries Payable Be Put Into Accounts Payable?
Business accounting systems can be complex and require careful planning to be certain that the bookkeeping is done correctly. Business liabilities must be managed correctly in order to maintain good relationships with vendors, as well as with employees. Since employee salaries and business invoices represent significant expenses, each requires similar management techniques to be certain that all expenses are posted to the correct accounts and profits are measured correctly.
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Accrual Accounts
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Salaries payable and accounts payable are examples of accrual accounts. These accounts contain accrued expenses, which are expenses that your business has incurred, but not yet paid. These expenses used with the accrual method of accounting allow a business to post expenses in the accounting period in which they occurred, even if they haven't been paid. The end result is more accurate financial statements and reporting of income and expenses.
Accounts Payable
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Accounts payable generally contain regular expenses that your business incurs, such as utilities or rent. Inventory expenses may also be detailed in accounts receivable. Often, the business may maintain a separate list of sub-accounts in the main accounts payable ledger, to track the balances that you owe to each separate vendor.
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Salaries Payable
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Salaries payable represent the payroll expenses that you must pay your employees in the future that they have already earned. A business may choose to post payroll expenses every week to salaries payable, and pay their employees bi-weekly or semi-monthly. A more common use of salaries payable would be for a partial pay period that occurs at the end of an accounting period, such as a few days of a pay period falling in the prior month. This account could also be used by a manager who wishes to set money aside for employee bonuses and have a portion of the bonuses calculated with the expenses of each accounting period.
Individual Systems
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Each business is free to operate its accounting system any legal way that it chooses. Generally, a business would set up the salaries payable account separate from the accounts payable for the business. This could be because the business considers salaries that it must pay more important than vendor accounts. It can separate the accounts in order of priority, and make better use of resources if the business faces a cash flow crisis. This arrangement may also allow the business to group salaries payable with other employee accrued expenses, such as benefits payable or retirement account contributions payable.
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