In general, salaries are payments to employees that are formally and legally on your payroll using a Payroll Service Provider (PSP). The PSP is responsible for paying your employer and employee taxes to the relevant authorities. Typically, businesses engage the PSP directly or via their accountants.
If you pay money to third parties or to yourself directly (i.e., not using a PSP), these payments are likely NOT salaries but rather - contractor payments, owner draws, reimbursement to employees, employee benefits, or other non-salary payments.
Please click on the link below to view all the transactions in your bank feed that are payroll related and please follow the instructions below.
Ask yourself - Is my business formally running payroll (and paying payroll taxes) via a PSP or via an Accountant?
If Yes -
You indeed running payroll - please add the PSP vendor that handles your payroll as the Payee (see in green) and review the relevant category you assign to the transaction (see in yellow):
Salary or Officer Compensation (if you pay salary to the owner or a very senior employee)
Payroll taxes; or
Service fee
P.S. If your accountant runs the payroll and you pay directly to your employees, feel free to add the name of the employee instead of the PSP vendor.
If No -
You are not actually running payroll.
The transactions should not be categorized as Salaries but rather as:
A ‘Contractor payment’ - if paid for direct services.
An ‘Owners draw’ or ‘Distribution’ - if paid to one of the owners in the business, not for direct services.
‘Reimbursement to employees’ - if paid back to an employee for expenses they incurred while working.
‘Employee benefits’ - compensation provided to employees in addition to their regular salaries or wages.
Other business expenses as may be relevant.
In each of these cases please add the relevant person as a Payee, and change Category accordingly.