On the income statement, payroll expenses are part of labor costs. They include employee salaries, employer payments for health insurance or similar benefits, payroll taxes paid by the employer, bonuses, commissions and similar expenses.

Doing payroll is a complicated process that involves ensuring that every employee is paid correctly, calculating the appropriate payroll taxes (which can vary with the employee's salary, whether he or she has hit the Social security cap for the year, etc.), and correctly deducting miscellaneous items (such as court-ordered child support, gym memberships or 401(k) contributions).

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Payroll is a list of employees who get paid by the company. Payroll also refers to the total amount of money employer pays to the employees. As a business function, it involves:

1. Developing organization pay policy including flexible benefits, leave encashment policy, etc.
2. Defining payslip components like basic, variable pay, HRA, and LTA
3. Gathering other payroll inputs (e.g., organization’s food vendor may supply information about the amount to be recovered from the employees for meals consumed)
4. The actual calculation of gross salary, statutory as well as non-statutory deductions, and arriving at the net pay
5. Releasing employee salary
6. Depositing dues like TDS, PF, etc. with appropriate authorities and filing returns

In short, we can say that payroll process involves arriving at what is due to the employees also called as ‘net pay’ after adjusting necessary taxes and other deductions.

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Payroll is not just about paying your people. It reflects the image of our Company.