What is Payroll processing?
Payroll refers to the total amount of money paid to employees by the employer.
Payroll is the compensation that a company must pay to its employees for a set period of time or on a specific date. It is typically managed by a company’s accounting or human resources department. For a small business it may be handled directly by the owner or an associate.
Payroll is increasingly being outsourced to specialized firms that handle payroll processing, employee benefits, insurance, and accounting tasks like tax withholding. Many payroll fintech companies, including Atomic, Bitwage, Finch, Pinwheel, and Wagestream, are using technology to streamline salary processes. These solutions pay employees more conveniently and quickly, as well as provide digital salary-related documents and innovative technology-enabled services required by the gig and outsourcing economy.
Payroll processing can also refer to a list of a company’s employees and the amounts owed to each of them. It is a significant expense for most businesses, and it is almost always deductible, which means it can be deducted from gross income, lowering the company’s taxable income.
It can differ from one pay period to the next due to overtime, sick leave, and other factors.