What Is Payroll In Accounting? Essential Things You Need To Know About Payroll

Payroll is compensation that an employer or a business has to pay to its employees, usually after a period or on a fixed date. The accounting or human resource departments generally manage payroll in medium to large-sized companies. Whereas in small businesses, owners or associates may directly handle payrolls. Outsourcing payroll services has also become quite common in recent years. But what is payroll in accounting? It is a common question that many ask. Payroll is an integral part of a smoothly running business. It requires sound knowledge about the ins and outs of how payroll works. In this article, learn things you need to know about online payroll services, from accounting and tax implications to internet services and business management.

What is payroll in accounting?

Payroll is the process of collecting, classifying, and paying wages to employees and other workers, typically by an employer or on behalf of an employer. It also includes benefits, payroll taxes, and other payments. Payroll is a system by which a business keeps track of its employees’ wages, taxes, and other deductions. It typically allows a company to track the pay and employment status of employees and tax withholding on certain payroll deductions.

types of payroll

There are six significant types of payroll that companies opt for based on business needs. They are as follows:
  1. Weekly Payroll
  2. Monthly Payroll
  3. Two-Weekly Payroll
  4. Biweekly Payroll
  5. Semimonthly Payroll
  6. Annual Payroll

pros and cons of payroll outsourcing

Depending on the size and type of an organization, there are several benefits and drawbacks of using a payroll service or outsourcing it. As a business, it is necessary to understand the pros and cons of each one. Here are some crucial points that you need to know before outsourcing or owning a payroll system:
  • Outsourcing payroll saves a significant business time it can use for core operation
  • You can minimize the errors by hiring a highly skilled and experienced team
  • Reputed accounting firms own state-of-the-art technologies that provide better security
  • Hiring payroll services solves your worries about changing compliance and government regulations
  • Outsourcing accounting & payroll services help you to integrate & synchronize different departments
  • Your outsourced team might not be available sometimes if you need bills instantly
  • Outsourcing accounting and payroll services involve sharing confidential & sensitive information
  • Finding a suitable payroll team might not be easy all the time

What does payroll look like?

Payroll is the process through which employers authorize and approve their employees’ expenses, wages, or benefits. Since it is a legal function, an employer has to manage the technicalities and audit the entire payroll process. Employees can choose to become independent contractors and not be treated as employees for payroll purposes if they are sole proprietorships, partnerships, LLCs, or sole proprietorships with more than five employees. Payroll services typically include:
  • Contacting the employee’s bank for direct deposit of monthly payments.
  • Processing all necessary tax returns.
  • Issuing W-2 forms for every month worked in a tax year.
  • Automating compliance with state and federal laws that govern payroll practices.

online payroll services

Online payroll services have been around for a while and are becoming more popular with every passing day. They offer countless benefits to employers and employees. The most significant advantage of payroll outsourcing service is that it can save valuable time for a business that its owners can put into core operations. In addition, it provides several high-tech features, such as payment interfaces and customizable reporting tools, available 24 hours a day. The online payroll service is not just convenient but also safe. A professional accounting & payroll management team has vast experience dealing with a variety of domains and owns endorsements from multiple companies that help you find & trust the right partners, particularly for data safety.

after the fact forms

It’s a good idea to write an After the Fact form for all payroll-related tasks, such as calculating and issuing paychecks. If you’re using QuickBooks, it’s easy to let the program calculate these forms, which you can print out or save in your data file. If you’re not using QuickBooks, you’ll need to hand calculate these forms by recording them in a spreadsheet or writing them down on paper.

California state taxes

California is one of the states in which employers must pay a payroll tax. This cost can be substantial for workers and their employers, but it does not always provide the kind of relief that one might hope. However, there are a number of ways to minimize the impact of California’s state payroll tax on your business, including allowing employees to contribute more towards their retirement savings, which is one thing that many employers do.


To be clear, the origin of payroll is not simple to explain. However, we can help you know what is payroll in accounting and how it works. Payroll is a way by which businesses pay employees for their work. Hiring a payroll service provider for your business can be both a blessing and a curse. Therefore, it is essential to know what you are getting into before making any decision. Contact us today to get professional consultation on accounting & payroll services and decide whether you should hire a payroll service provider.

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