Payroll

What is payroll?

Payroll is the process by which a company calculates and distributes wages to its employees. It includes tracking work hours, calculating gross pay, deducting taxes and benefits, and issuing payments. Payroll also involves maintaining compliance with tax laws and employment regulations.

In short, payroll ensures employees are paid accurately and on time‌ — ‌and that employers meet their legal and financial obligations.

How does payroll work?

The payroll process typically follows these core steps:

• Track time and attendance: Record employee hours (for hourly staff) or verify fixed salaries.
  
  
• Calculate gross pay: Determine total earnings before deductions.
  
  
• Apply deductions: Subtract taxes, benefits, and other withholdings (both pre-tax and post-tax).
  
  
• Process payments: Disburse net pay through direct deposit, checks, or other methods.
  
  
• File and report: Submit payroll taxes to government agencies and issue pay stubs and annual tax forms (like W-2s or payslips).
  
  

Payroll can be handled in-house, through third-party providers, or with automated software platforms. 

Why is payroll important?

Accurate payroll is critical for both compliance and employee satisfaction. It helps companies:

• Pay employees correctly and on schedule.
  
  
• Comply with tax laws, labor regulations, and reporting requirements.
  
  
• Avoid legal penalties and fines.
  
  
• Build trust and credibility with their workforce.
  
  

Examples of payroll in practice

• A small business runs payroll twice a month using a cloud-based platform.
  
  
• A multinational company coordinates payroll across multiple countries, adapting to each region’s tax rules and pay cycles.
  
  
• A startup outsources payroll to a provider to ensure local compliance while scaling quickly.
  
  

Payroll vs. pay period vs. payroll cycle

The terms payroll, pay period, and payroll cycles are closely related but refer to different parts of the compensation process.

• Payroll is the full process of calculating and issuing employee pay.
  
  
• Pay period refers to the timeframe for which work is paid (e.g., biweekly).
  
  
• Payroll cycle covers the entire workflow‌ — ‌from time tracking through payment and tax filing‌ — ‌repeating on a regular schedule.
  
  

Understanding the distinction helps employers streamline operations and ensure compliance.

Things to consider with payroll

When managing payroll, employers should:

• Ensure compliance with local tax laws and labor regulations.
  
  
• Choose the right tools or providers to automate and scale payroll.
  
  
• Maintain secure records for auditing and reporting.
  
  
• Communicate pay policies and schedules clearly to employees.
  
  

How Remote can help

Running payroll across multiple countries is complex, but Remote makes it simple. Our global HR platform helps you manage compliant, accurate, and on-time payments in 180+ countries‌ — ‌along with taxes, benefits, and local labor laws. Discover how Remote can help simplify your global HR today.