What types of costs are included in payroll expenses? When are payroll expenses incurred?

What types of costs are included in payroll expenses?

When are payroll expenses incurred?

Expert Solution

Payroll expenses refer to all the expenses associated with the employees of a company. It simply includes all types of compensation that the organization pays to its employees either directly or indirectly for availing their services. Any expense that a company incurs on its employees should be termed as a Payroll expense.

Main types of expenses included in Payroll expense are:-

1. Salaries and Wages.

2. Bonuses.

3. Commission.

4. Travelling allowance.

5. Employees stock option plan.

6. Employees heath insurance and medical benefits.

7. Employees provident fund.

8. Training programmes expenses.

9. Payroll taxes.

Payroll expenses are incurred as soon as the company avail services.of its employees or soon after the employees fulfill thier task. Irrelevant of whether the payment is done or not by company, these expenses are incurred once the services are provided by employees. However, as far as the payment of payroll expense is concerned, it depends upon the policy of company, terms and conditions of employement, rules of the law and prevailing conditions of the company and economy. A company may pay on a daily basis, montly, quaterly, semianually or anually which all depends on various factors mentioned above.

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What types of costs are included in payroll expenses? When are payroll expenses incurred?

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