What Is The Meaning Of Payroll System?

What Is The Meaning Of Payroll System?

January 12, 2016

If your business has one or more employees, you should have a payroll system in place.

What Is The Meaning Of Payroll System?

If your business has one or more employees, you should have a payroll system in place. An automatic payroll process helps you comply with legal and tax requirements and simplifies the process of paying your employees. Many employers outsource the payroll function to a payroll service provider or use payroll system software instead of relying on manual processes.

Time and Wages

A payroll system calculates the amount you owe your employees based on factors such as the time they worked, their hourly wages or salaries, and whether they took vacation or holiday time during the pay period. The system adjusts gross pay by calculating and subtracting taxes and other withholding amounts. On payday, the system provides your employees with paper checks or payroll deposits and a summary of the information you used to calculate their gross and net wages.

Taxes and Withholding

A payroll system also processes tax information and helps you comply with your tax obligations. The system adjusts employees’ pay based on the withholding status they provided on their Dependent Registration Form, and generates tax receipts for employees at the end of the year. A payroll processing system can also calculate the amount of payroll tax you owe and automate your payments to taxing authorities. It processes other payroll deductions such as wage garnishments and voluntary deductions.


Payroll reports can help a business manage one of its highest expenses — labor. A payroll system generates a multitude of reports for hourly and salaried employees. Many systems include reporting templates so managers can quickly and easily find out what their payroll costs are for any given period, and can check other important facts such as headcount, vacation balances, and the employees that are the highest and lowest earners.

Source: smallbusiness.chron.com

If you have any questions, do not hesitate to contact our Payroll service.

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