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What Is a Payroll System?



A payroll system is the software through which a company manages payment of its employees.

The software system through which a company manages the accurate and legal payment of its employees, or payroll system, can be either licensed in-house or outsourced. As a general rule of thumb, large companies rely on a dedicated human resources and accounting staff to take care of payroll functions while smaller businesses tend to rely on the services of a part-time bookkeeper or third-party payroll service.

Largest Payroll Service

One of the largest payroll services is Automatic Data Processing (ADP), with annual revenues of more than $9 billion and 570,000 clients.  Such a service helps ensure that all initial paperwork signed by a new employee is in compliance with applicable laws and delivers paychecks to a client via mail or messenger after receiving the performance data of employees from a verified company representative. Paychecks may also be direct deposited into an employee’s personal bank account.

National Payroll Week

In the United States, the annual National Payroll Week celebration is designed to remind workers of the importance of payroll systems and those who use them.  Launched in 1996 by the American Payroll Association (APA) and scheduled each year to coincide with Labor Day, the September 6-10, 2010 edition focuses on the fact that payroll contributes more than two-thirds of the U.S. Treasury’s annual revenues. The general aim of the weeklong APA sponsored celebration is to help workers understand the sometimes-complicated federal and state withholdings scale, a main cog of paychecks and payroll systems. Other elements governed by payroll systems include Medicare deductions, Social Security deductions and, where applicable, matching 401(K) contributions made by an employee.

As the world moves more and more towards the online horizon, new companies have begun to offer an online third-party payroll solution to compete with the likes of ADP and other leading services. As a sign of just how fast the needs of small businesses are progressing, there is now even an application that allows owners to monitor, approve, and issue payroll from any location.



ADP – About Us, Retrieved September 6, 2010 from

National Payroll Week – Retrieved September 6, 2010 from – “Sure Payroll Wins CPA Technology Advisor’s Innovation Award for First Ever Mobile Payroll App”, June 24, 2010, Retrieved September 6, 2010 from

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