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Running a payroll program is an exact process. From a small business with five workers to a conglomerate with five hundred employees, the principles behind payroll are essentially the same. Nowadays, payroll is oftentimes delegated to a specific team of HR or payroll professionals or payroll software. Even with the presence of automation and innovations, it is beneficial to understand what payroll is about. 

What is “payroll”? 

Payroll is a term that can mean several things depending on how it is used. First, payroll can refer to a complete list of all individuals that a company pays for their services along with their corresponding hourly rate, salary, and employee information. Next, payroll can also mean the compensation that a company pays each pay period. And finally, payroll can refer to a particular department within an organization tasked to calculate and process wages and taxes of all employees. 

For start-ups and small businesses, processing payroll may fall on one person who is tasked with both finance and HR responsibilities. As companies expand and scale, payroll processing may be outsourced to a payroll provider or done in-house using payroll software. 

How do employers process payroll?

There are different elements in processing payroll. 

Before running a payroll program, remember that you need the following information: 

It involves keeping track and monitoring the number of hours each employee works, calculating time off, applicable overtime pay, calculating withholding taxes and deductions, and disbursement. Let’s take a look at each component for a better understanding.



I am an employer. What are my options in running my company’s payroll program? 

The first option for small businesses is to process payroll manually. This entails doing each step manually which can take time. Not to mention, any manual work leaves a margin for human error. Another option is to outsource payroll processing to a payroll professional or accountant. Finally, you can opt to use payroll software for your business. Automating your payroll program may prevent manual errors and streamline processes. 

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