Time and Wages

A payroll system calculates the amount you owe your

employees based on factors such as the time they worked,
their hourly wages or salaries, and whether they took
vacation or holiday time during the pay period. The system
adjusts gross pay by calculating and subtracting taxes and
other withholding amounts. On payday, the system provides
your employees with paper checks or payroll deposits and a
summary of the information you used to calculate their gross
and net wages.

Taxes and Withholding

A payroll system also processes tax information and helps
you comply with your tax obligations. The system adjusts
employees' pay based on the withholding status they
provided on their IRS W-4 forms, and generates a W-2 form at
the end of the year. A payroll processing system can also
calculate the amount of payroll tax you owe and automate
your payments to taxing authorities. It processes other
payroll deductions such as wage garnishments and voluntary
deductions.

A payroll system involves everything that has

to do with the payment of employees and the
filing of employment taxes. This includes
keeping track of hours, calculating wages,
withholding taxes and other deductions,
printing and delivering checks and paying
employment taxes to the government`.