# 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.