What is Payroll Administration?

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  • Written By: N. Madison
  • Edited By: Sara Z. Potter
  • Last Modified Date: 11 February 2020
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Payroll administration encompasses all the tasks involved in paying an organization’s employees. It typically involves keeping track of hours worked and ensuring that employees receive the appropriate amount of pay. It also includes calculating taxes and Social Security, as well as ensuring that they are properly withheld and processed. Depending on the company in question, a full range of other deductions may be calculated, withheld, and processed as part of this process. Additionally, the processing of contractor payments may fall under the same umbrella.

The specific tasks involved in payroll administration tend to vary according to the needs of each unique company or organization. For example, some companies have workers that receive commissions in addition to salaries. In these companies, including commissions in employee salaries is a part of payroll administration. For some companies, it also involves assigning exempt or non-exempt status to workers, adding bonuses into paychecks, calculating overtime payments, and adhering to applicable employment laws.

Handling payroll-related problems are part of payroll administration as well. If an employee is paid an incorrect amount or a direct deposit fails to go through, both things are issues dealt with by this department. Likewise, tax filing and deduction errors are payroll matters as well.


Payroll administration can be very simple, involving the payment of just a handful of employees, or very complicated, involving payroll for thousands of employees and contractors. In some, very small companies, it may be handled by the owner of the company or an employee. However, other companies may have many employees to pay and keep track of, necessitating a well planned, efficient system.

Some companies choose to handle these tasks in-house, often creating a separate department just for the handling of payroll. Often, such organizations purchase software to streamline payroll-related tasks. Some companies even have special software designed for them, creating a system that is tailored to their unique requirements.

Many companies decide to outsource payroll administration to other companies that handle most, if not all, payroll-related tasks for the companies they serve. Some also provide management and human resource assistance as well. Many tailor their services to meet the needs of organizations of all sizes and types. Some even offer on-site help and payroll consultations as well.


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Post 5

The importance of payroll administration certainly has not changed. We are all anxious to get our paychecks!

The company I work for went through some major changes a few months ago, and now our payroll administration duties are sent to payroll service providers outside of the company.

So far, there have not been any problems. I don't know if it is always a good idea to outsource this type of service, but can see the benefit of it from a financial standpoint if it is cheaper for the company to outsource.

Post 4

I worked in the payroll department of a large company long before there was direct deposit available. Most of my job duties consisted of processing the employees payroll manually.

With direct deposit becoming so common, these type of payroll jobs are few and far between, unless you work for a small company.

It seems that most people are used to having their paycheck automatically deposited into their bank account, and waiting for a paper check seems a thing of the past.

Post 2

Kindly let me know how to calculate the salary along with basic, HRA, DA and others.

Please let me know with an example solved.

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