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What are Payroll
Payroll refers to all activities or system functions that relate to the payment of wages, salaries, benefits, bonuses and deductions.

Payroll denotes the agenda concerning wages, salaries, benefits, bonuses and deductions. Sometimes the term (in accounting) is also used to denote aggregate wages and salaries paid to all workers in a given period (week, month, a year). Payroll is an important part of the human resources management.

Payroll in practice: Payroll is an essential part of organization’s resources management and the entire accounting of the company. It is one of the areas of business processes, which strongly depends on the legislation of a particular country where workers are employed and paid. The proper treatment of payroll needs a thorough knowledge of the laws. It affects the amount of taxes paid, which is why many organizations use outsourcing of these services by professionals (so called Payroll Outsourcing). Payroll makes up a significant part of the costs of organizations and has significant impact on the morale and motivation of employees. Timeliness and accuracy of calculation of payroll is therefore very important.

Nowadays, payroll doesn’t exist without the support of application software. It is either part of large ERP systems or part of HRM systems or it exists as standalone solution (Payroll Solutions).

Payroll calculation is based on a variety of substrates, so it is usually strongly linked to other processes and systems in the organization.

  • Performance Wage (e.g. timesheets)
  • Time Wage (attendance, timesheets)
  • Benefits (use of car, mileage)
  • Holiday (Holiday leave)

The result of the payroll processing is paid wage, salary and basis for calculation of taxes, deductions and levies.

Related terms and methods:

Related management field:

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Last update: 16.10.2015

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