What is payroll?

Payroll is the process of paying a company’s employees for their work. This process incorporates several functions:

• Calculating employee pay and considering factors like hourly wages, salaries, bonuses, commissions, and overtime pay
• Withholding taxes and deductions, such as federal, state, and local taxes, as well as employee deductions for benefits like health insurance
• Maintaining accurate records, which includes tracking employee hours worked, pay rates, taxes withheld, etc.
• Distributing payments either electronically through direct deposit or via paper checks

Payroll ensures employees receive their rightful compensation while adhering to tax regulations and legal requirements.

Frequently asked questions

Who typically handles payroll processing at a company?

For small businesses, the owner or a designated staff member might manage payroll in-house.

Larger businesses often have dedicated payroll departments or outsource payroll processing to a third-party provider.