1.0 INTRODUCTION

Payroll consists of the process by which a business pays its employees for work performed during a specific period. A payroll system allows businesses to follow a set series of processes in order to make timely, correct payments in compliance with government regulations. A payroll system may be manual or computerized and handled in-house or outsourced to another provider.

2.1 OBJECTIVES

A payroll system should be geared toward paying employees what they earn within a reasonable time frame and accurately tracking paycheck amounts as well as tax and benefit withholdings. Payroll systems should be thorough without being overly complex and cumbersome, and they should be designed thoughtfully enough to work well with a minimum of oversight. Having a well-designed payroll system is in the best interest of employees, business owners and human resources staff.

2.2 Scope And Limitation
Accuracy
Accuracy is an important objective of a payroll system, because employees are entitled to be fairly compensated for the work they have done, and a company's financial well-being depends on not overpaying employees for the time they have worked. In addition, businesses are liable for payroll taxes on employee earnings as well as remitting payroll taxes that have been withheld from employee paychecks.
Consistency
A payroll system has many components, and the information in each section should be internally consistent. An employee's weekly wages over the course of a month should add up to the system's sum for his monthly wages, and the weekly totals for all employees over the course of the month should add up to the monthly total for all employees.
Cost-Effectiveness
A payroll system should be cost-effective by performing calculations efficiently and not taking more of the bookkeeper's time than necessary. In addition, an effective payroll