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In a company, payroll is the sum of all financial records of salaries, wages, bonuses and deductions.



A paycheck is traditionally a paper document issued by an employer to pay an employee for services rendered. In recent times, the physical paycheck has been increasingly replaced by electronic direct deposit to bank accounts.

In most countries with a developed wire transfer system, using a physical check for paying wages and salaries has been uncommon for the past several decades. However, vocabulary referring to the figurative "paycheck" does exist in some languages, like German (Gehaltsscheck), partially due to the influence of US popular media, but this commonly refers to a payslip or stub rather than an actual check. Some company payrolls have eliminated both the paper check and stub, in which case an electronic image of the stub is available on an Internet website.

Payroll taxes

Federal/national, state/provincial, and/or local agencies require employers to perform various payroll functions,[1] such as withholding amounts from employees' compensation to cover income tax, Social Security, and Medicare.

Payroll taxes are levied by government agencies on employees' wages, tips, and other compensation. The amounts withheld by employers from employees' pay for federal income, social security, and Medicare taxes are considered to be trust-fund taxes, because the money is held in a special trust fund for the U.S. government. Amounts withheld for state and local income taxes are held in trust for the state and local governments.

Pay slip

An example of a payslip from the John Lewis Partnership, showing gross salary, tax and National Insurance paid and yearly bonus entitlement, among other things

A pay stub, paystub, pay slip, pay advice, or sometimes paycheck stub, is a document an employee receives either as a notice that the direct deposit transaction has gone through, or as part of their paycheck. It will typically detail the gross income and all taxes and any other deductions such as retirement plan contributions, insurances, garnishments, or charitable contributions taken out of the gross amount to arrive at the final net amount of the pay, also including the year to date totals in some circumstances.

Payroll card

For employees that, for one reason or another, do not have access to a bank account (bad check history, not in close proximity to bank, etc), there is a solution, offered by most major Payroll Service Providers. Instead of an employee receiving a check, and paying up to 5-10% to cash the check, the employee can have the direct deposit loaded onto a debit card. In this, a company can save money on printing checks, not buy the expensive check stock, and not having to worry about check fraud, due to a check being lost or stolen. A payroll card is a plastic card allowing an employee to access their pay by using a debit card. A payroll card can be more convenient than using a check casher, because it can be used at participating automatic teller machines to withdraw cash, or in retail environments to make purchases. Some payroll cards are cheaper than payday loans available from retail check cashing stores, but others are not. Most payroll cards will charge a fee if used at an ATM more than once per pay period.

The payroll card account may be held as a single account in the employer's name. In that case, the account holds the payroll funds for all employees using the payroll card system. Some payroll card programs establish a separate account for each employee, but others do not.

Many payroll cards are individually owned dda (demand deposit accounts) that are owned by the employee. These cards are more flexible, allowing the employee to use the card for paying bills, and the accounts are portable. Most payroll card accounts are FDIC-insured, but some are not.

Payroll Frequencies

Companies typically generate their payrolls on regular intervals, for the benefit of regular income to their employees. The regularity of the intervals, though, varies from company to company, and sometimes between job grades within a given company. Common payroll frequencies include: daily, weekly, bi-weekly (once every two weeks), semi-monthly (twice per month), and to somewhat of a lesser extent, monthly. Less common payroll frequencies include: 4-weekly (13 times per year), bi-monthly (once every two months), quarterly (once every 13 weeks), semi-annually (twice per year), and annually.

Payroll Professionals

In Canada, Payroll Professionals are Certified by the Canadian Payroll Association. They are qualified as either 'Payroll Compliance Practitioners (PCP)' or as 'Certified Payroll Managers(CPM)'.

In the United States, Payroll Professionals are Certified by the American Payroll Association. They are designated as Fundamental Payroll Certification (FPC) or Certified Payroll Professional (CPP) after passing the appropriate certification exam.

Upon completion of the required course material and with continuing education and membership fees the person is then entitled to the post-nominal letters associated with their current level of accomplishment.

In the United Kingdom, payroll professionals are represented by the Institute of Payroll Professionals.[1]

In Ireland both the Irish Payroll Association (IPASS) and Complete Office Package Systems Ltd [2] provides education and training for payroll professionals. IPASS are the representative body for payroll professionals in Ireland. [3] The Irish Government education body HETAC accredits the IPASS Payroll and VAT qualifications.


Payroll warrants look like checks and clear through the banking system like checks, but are not drawn against cleared funds in a deposit account. Instead they are drawn against "available funds" that are not in a bank account, so the issuer can collect interest on the float. In the US, warrants are issued by government entities such as the military and state and county governments. Warrants are issued for payroll to individuals and for accounts payable to vendors. Technically a warrant is not payable on demand and may not be negotiable.[2] Deposited warrants are routed to a collecting bank which processes them as collection items like maturing treasury bills and presents the warrants to the government entity's Treasury Department for payment each business day.

In the UK, warrants are issued as payment by the NS&I when a Premium Bond is chosen.

Payroll Outsourcing

Businesses may decide to outsource their payroll functions to an outsourcing service like a payroll bureau or a fully managed payroll service. These can normally reduce the costs involved in having payroll trained employees in-house as well as the costs of systems and software needed to process payroll. Within the United States, business payrolls are complicated in that taxes must be filed consistently and accurately to applicable regulatory agencies. Restaurant payrolls which typically include tip calculations, deductions, garnishments and other variables can be extremely difficult to manage especially for new or small business owners.

In the UK, payroll bureaus will deal with all HM Revenue & Customs enquiries and deal with employee's queries. Payroll bureaus also produce reports for the businesses' account department and payslips for the employees and can also make the payments to the employees if required.

Another reason many businesses outsource is because of the ever increasing complexity of payroll legislation. Annual changes in tax codes, PAYE and National Insurance bands as well as more and more statutory payments and deductions having to go through the payroll often mean there is a lot to keep abreast of in order to maintain compliance with the current legislation.

See also





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