In a company, payroll is the sum of all financial records of salaries for an employee, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. Payroll plays a major role in a company for several reasons. From an accounting perspective, payroll is crucial because payroll and payroll taxes considerably affect the net income of most companies and they are subject to laws and regulations (e.g. in the US payroll is subject to federal and state regulations). From an ethics in business viewpoint payroll is a critical department as employees are responsive to payroll errors and irregularities: good employee morale requires payroll to be paid timely and accurately. The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct withholdings and deductions, and to ensure the withholdings and deductions are remitted in a timely manner. This includes salary payments, tax withholdings, and deductions from paycheck.
The term payroll generally refers to the process of identifying employees, calculating the pay and payroll taxes, recording the payroll transactions, making the payments, and completing required federal and state payroll tax forms. The diagram on the next page shows you an overview of the process.
A payroll system is an important application that should be used by businesses of any size. These systems are a guaranteed way to make sure your payroll is done on time and in compliance with all taxing authorities. Tax laws and rates have continually changed in recent years, new tax credits, expiration of old credits and rate changes can all affect the outcome of your payroll. If your company is not in compliance with all the new tax rates, either federal, state or local, you may face severe penalties from the taxing authority, or worse owe back taxes. Your employees may find that they underpaid their taxes and when filing time arrives they will owe a considerable sum they cannot afford. Employees can hold the company responsible for any misappropriations concerning their taxes, and no business owner wishes to face litigation. Payroll systems are simple to use, easily affordable and compliant with all new tax laws. These systems can be programmed to calculate taxes and deductions to your specific area. Most systems have an internet database that can be accessed for updates to tax codes and changes in the law. These systems also can help the business owner calculate the amount of taxes they owe the government at the end of each quarter. Failure to submit the correct taxes each quarter is the number one reason that business owners find themselves in trouble with the Internal Revenue Service. Payroll services can also be performed offsite. Many companies specialize in providing payroll systems to other businesses. If you are not ready to install and use a system like this in your own company, you may consider going to this type of business to have the service performed. Payroll systems are very simple to use. They can easily be incorporated into any business applications being used by the company. The use of this type of system in your company will help ensure that you remain up-to-date with the current tax laws and your obligations to the different taxing authorities. We perform the same services as traditional payroll management services for roughly half the cost. Unlike other online payroll services and payroll software, our service goes beyond making calculations and simple reporting. Compared to doing payroll yourself, we reduce payroll time from a couple hours per pay period to 5 minutes or less. The term "payroll" encompasses every employee of a company who receives a regular wage or other compensation. Some employees may be paid a steady salary while others are paid for hours worked or the number of items...
Please join StudyMode to read the full document