Payroll definition

A payroll is the total amount of compensation paid to employees, covering the period from one pay day to the next pay day. Thus, the payroll for a company that pays its employees on a weekly basis covers a seven-day period. This compensation amount will likely vary over time, since it may include one-time payments for overtime, bonuses, and so forth. The term also refers to a list of all current employees, along with their standard compensation amounts. Payroll is typically the largest single category of expense in a services firm, and is a major expense in most other organizations.

The processing of payroll is usually a standard function of the accounting department. There may be a group of accountants who are specifically assigned to payroll processing on an ongoing basis, or certain payroll activities may be outsourced to a third party that specializes in payroll processing.

Related Courses

How to Audit Payroll
Optimal Accounting for Payroll
Payroll Management