Final answer:
Accrued payroll liabilities are current liabilities consisting of wages and salaries owed to employees and associated payroll taxes and other deductions, expected to be paid in the next pay period. Employers are responsible for withholding employee taxes and also pay their own employer taxes, which, together with employee withholdings, are remitted periodically to the appropriate authorities.
Step-by-step explanation:
Understanding Payroll Liabilities
Amounts owed to employees for salaries and wages at the end of an accounting period that are expected to be paid in the next pay period are referred to as accrued payroll liabilities. These are current liabilities on a company's balance sheet because they are short-term obligations that the company must settle in the near future, usually within one year or the company's operating cycle, whichever is longer. Within accrued payroll liabilities, you might find not only wages and salaries but also associated payroll taxes and other deductions.
Understanding Deductions and Employer Taxes
Deductions from an employee's wages, such as withholding tax and contributions for social security and various insurances, are part of payroll liabilities. These are monies that the employer holds back from an employee's paycheck and are eventually paid to governmental entities or insurance funds. In addition to the deductions from the employee's wages, employers also bear the responsibility of paying certain taxes based on the employee's wages, which are contributions made from the employer's own funds toward social security systems and insurance programs.
Employers must report and remit these taxes frequently, including quarterly and annual filings, with electronic reporting now being a common requirement. These payroll liabilities ensure that employers contribute to the necessary funds that support various benefits such as workman's compensation insurance, which is essential for workers who get injured on the job.
When it comes to individual employee decisions, choices made on the W-4 form can affect the net amount received from each paycheck. These withholdings cover the local, state, and federal tax liabilities, and correct estimation and withholding throughout the year may lead to a tax refund during the filing of the annual tax return.