Why does payroll exist?


Payroll is a system that exists in order to ensure that employees’ remuneration is paid in full and on time. A payroll department doesn’t exist in every company, but having a system in place ensures that companies remain compliant with labour laws.  

For small business owners, running a business takes up quite a significant amount of time, so enlisting help from experts can be highly useful. Not only do individuals save time in this way, but they can reduce the likelihood of making costly mistakes.  

There have been debates about which department becomes responsible for payroll systems with a business. For larger companies, does it become the responsibility of the HR department or the Finance division? In reality, it should be the responsibility of both, as effective payroll requires excellent intra-departmental communication. For payroll officers, being able to get the necessary information from personnel is vital. They are then able to input data into a payroll system. 

The company bookkeeper then has to follow up to ensure complete accuracy and that employees are paid the correct amounts.  

Payroll is key for record-keeping too. HR departments are tasked with keeping records of all the addresses and contact details of all employees.  

Payroll exists to keep track of each employees’ benefits and what must be paid in terms of deductions. 

Staff members responsible for payroll must be highly organised, with the ability to pay strong attention to detail. They must be able to keep track of how long an employee has worked in a given month and they must be reliable enough to keep employee bank details safe. Computerised record-keeping is the norm nowadays, but it’s vital for payroll personnel to be familiar with development of pay policies and components of payslips.  

Non-adherence to labour laws leads to legal and financial consequences, so it’s imperative for everyone in an organisation to understand why payroll exists.


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