Payroll

The system and process by which employers calculate and distribute employee compensation — including wages, deductions, and tax withholdings.

Payroll refers to the complete process of compensating employees: calculating gross pay, applying deductions and withholdings, distributing net pay, and filing the required tax reports with federal and state authorities. For employers, payroll is one of the most compliance-heavy functions — errors can result in IRS penalties, state agency fines, and employee claims. Most companies use payroll software (ADP, Gusto, Paychex, Rippling) or outsource to a payroll provider to manage the complexity.

For employees, payroll affects every paycheck. Your pay cycle (weekly, biweekly, semi-monthly, monthly), pay date, and the accuracy of your withholdings and deductions all flow through payroll. Common payroll issues employees encounter include incorrect tax withholding, missing overtime pay, wrong deduction amounts, and delays in adding or removing benefits elections. Errors should be reported to HR or payroll immediately — most can be corrected in the next pay cycle.

Common Pay Schedules

  • Weekly: 52 paychecks/year — common in hourly and construction industries.
  • Biweekly: 26 paychecks/year — most common for salaried employees in the U.S.
  • Semi-monthly: 24 paychecks/year (e.g., 1st and 15th) — common in corporate settings.
  • Monthly: 12 paychecks/year — less common in the U.S., more common internationally.
  • Biweekly vs. semi-monthly: biweekly results in two 'extra' paychecks per year (in months with 3 pay dates).

Example

A company runs biweekly payroll every other Friday. On each pay date, the payroll system calculates gross pay for each employee, deducts federal/state taxes based on W-4 elections, removes health insurance premiums and 401(k) contributions, and deposits net pay via direct deposit. It simultaneously files payroll tax reports with the IRS and state agencies.