Who is responsible for payroll?

Payroll is a system used to calculate the amount of money that businesses should pay its employees. This is also the department that ensures that amounts are accurate and that they are paid on time. 

The question of who is responsible for payroll has been a tricky one to answer over the years. Each organisation has varying needs. What McDonald’s needs is not going to be the same as the corner café. What is similar though is the need to have a consistent system in place that can be relied upon. 

Duties are typically divided between HR and Finance departments.  

The latter department is properly equipped to handle tax implications and GAAP associated with payroll. 

HR should maintain the database of employees, while ensuring that all data entered about employees is accurate at all times. 

These departments should ideally work in tandem to achieve success.  

Determining who is responsible for payroll is largely dependent on organisational size. For instance, businesses with more than 100 employees task HR with inputting data into a software programme. Then the accounting department takes over in terms of payments, reporting requirements as well as dealing with taxes. The size of an organisation is largely the key determining factor for where this kind of responsibility lies. 

Some SMEs may opt to rely on HR and bookkeepers. These departments are responsible for keeping confidential information secure. Other organisations may opt to establish payroll departments, with professionals tasked with calculating overtime, holiday pay and bonuses. With better technology, there are now easier ways to implement the payroll function, such as by relying on software. The data inputted into this system however needs to be completely correct and relies on people within a company to do it properly. 

Management needs to be diligent about monitoring the entire process and making sure that all employee salaries are paid on time and that the amounts are accurate.