Payroll Processing  

Payroll Processing


Payroll Processing Solutions > Payroll Clerks

payroll processing envelope Payroll processing is the process of periodically calculating gross pay, taxes, voluntary deductions, and net pay for a company's employees.  Detailed salary, pay rate, and earnings-to-date information about each employee is compiled from personnel and payroll files, allowing the correct amount of income tax, social security tax, and other deductions to be determined.

Until about 40 years ago, these calculations were performed manually or with electronic calculators, but computers have largely automated these calculations in recent decades.  Nevertheless, with all of the information that must be factored in and reported every pay period for each employee, payroll processing is a complex and time-consuming job that comes under the direction of the accounting department.

In addition to deducting federal, state, and local taxes and sending them to the correct government offices, businesses also need to calculate Social Security and Medicare taxes, unemployment tax, and workers' compensation.  While individuals pay 50% of their social security tax, their employer is required by law to pick up the other half.  Whereas Social Security and Medicare are flat rate taxes, the unemployment tax rate can be reduced for employers who have a pattern of keeping a stable work force.  The unemployment tax program is a joint venture between the United States federal government and the individual States, so the employer pays part of the unemployment tax to the federal government and another part to a particular state.

electronic time clock

Today, payroll processing software is available to capture time clock data, perform payroll calculations, produce payroll checks, generate payroll reports, and submit the necessary information to federal, state, and local tax authorities.  In some cases, payroll software is included in comprehensive accounting or human resources packages.

weekly timesheet Some companies process their payroll internally, but the laws concerning taxes, employee benefits, and deductions change from time to time, making it difficult and expensive for companies to maintain their own payroll software.  So an increasing number of firms have opted to use outsourced payroll and human resource solutions offered by companies like ADP, Ceridian, and PayChex.  With all of the various deductions that must be monitored and calculated, payroll processing can be a difficult, time-consuming, and challenging job.  These payroll firms, and other payroll services, can make it easier on the in-house payroll department and ensure that paychecks are done correctly and on-time.

Some of these firms can handle a broad spectrum of employee administration functions for large and smaller employers.  In addition to payroll and human resource services, they offer solutions in the areas of benefits administration and tax filing as well as time and attendance tracking and retirement planning.

Payroll Services

  • ADP
    Offers payroll, benefits administration, and human resource services.
  • Ceridian
    Payroll processing, tax filing, HRMS, time & attendance, and benefits outsourcing.
  • Paychex
    Features payroll, human resources, and benefits outsourcing solutions.
    Offers a simple and economical web-based payroll service for small businesses.
  • Advantage Payroll
    National provider of employee payroll processing services features continually enhanced proprietary software, online payroll management and a centralized data network.
  • QuickBooks
    Find a range of payroll solutions from in-house to full service payroll processing.  Choose the best payroll service option for your business.

Payroll Software

    Features an online collection of paycheck tools.
  • PayBreeze
    Offers a simple and intuitive paycheck calculator.

Related Payroll Industry Website

  • American Payroll Association
    Service and support organization for the payroll industry.  The stated mission of APA is to support the Payroll Profession with member benefits including certification, reference materials, payroll training and networking.

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