What is payroll?
- Payroll is the total amount of wages that a company pays its employees for a set
period of time or a given date.
- Payroll is usually handled by the accounting or the human resources within the
company. Small-business payrolls may be handled directly by the owner or an
associate.
- Payrolls typically includes details like employee names, hours worked, wages or
salaries, deductions (such as taxes and benefits), and the net amount paid to
each employee for a specific pay period, often on a weekly or monthly basis.
In the Payrolls there is Gross Pay and Net Pay.
- Gross pay is an individual's total earnings throughout a given period before any
deductions are made.
- Net pay is take-home pay, or the amount employees earn after all payroll
deductions are subtracted from their gross pay.
- Gross salary - Deductions = Net Salary.
- payroll infrastructure is used to keep track of how much each employee earns and
what they pay in tax.
What is the Salary and Wages?
- Salary is a fixed amount per pay period.
- Wages are based on an hourly rate.
What is the payroll system and how does it work?
- A payroll system is a software application businesses used to manage and
automate the process of paying employees. It calculates employee salaries and
taxes, tracks hours worked, and issues payments through direct deposit or check.
Benefits of having a payroll system?
- Payroll keeps employees and companies protected
- It keeps tracks of employees' records
Pros and cons of having a payroll system?
• Prons
- work out payroll calculations and deductions quicker
- generate accurate pay slips
- calculate bonuses, expenses, holiday pay, etc with minimum effort
- automate certain tasks, such as year-end reporting
- reduce the burden of compliance
- remove the need to understand complex tax legislation or rules
- store data such as pay slips and annual reports in a secure, easily accessible system
• Cons
- data security, loss or theft
- cyber security and fraud
- information access, quality and control
Who invented the payroll system and why did they make it?
• The payroll system dated back to 7000 BC where the ancient Greeks of Athens
used a payroll system to keep their business books in order.
• Clerks or treasurers kept financial records, including pay details, by chiseling the
information into stone.
• 1799 Payroll System History Evolves. The introduction of income tax meant that
employers and employees needed more comprehensive and reliable
documentation to keep track of payroll because the Industrial Revolution resulted
in mass production and consequent mass employment. This meant that all
stakeholders relied on the financial documentation that came with payroll systems.
- At this period, banks were opening up to the general public, making it easier for
people to save, spend, and keep track of their financial transactions than in the
past. Payroll system development followed the demand for precise financial data
records from both people and corporations.
• This early IT based payroll system began to take shape in the 1950s, payroll
systems were reliant on pen and paper. However, this year, the first computerised
system – Lyons Electronic Office (LEO) – was introduced to provide businesses with
assistance for clerical tasks (including payroll).
having evolved from stone tablets to books and feathers and now to cloud-based software
over thousands of years, payroll systems are likely to develop even further
