The term payroll has several different meanings:
- The distribution of paychecks (physical or electronic) to employees each payday, as in "I finished doing payroll yesterday."
- The financial records for employee wages/salaries, withholding, deductions, bonuses, pay for time not worked (holidays, vacations, sick time, etc.) and other items on employee paychecks.
- It can also mean the record of total earnings of all employees for a company in a fiscal year.
- Payroll taxes are those taxes required to be paid to federal and state taxing authorities as a result of paying employees (such as FICA taxes and unemployment taxes). The IRS strictly defines payroll taxes as FICA taxes (Social Security and Medicare), but the term is often used in the general sense.
- Payroll processing describes the preparation of paychecks (including withholding and deductions), distribution of paychecks, and payment and porting of payroll taxes. Options for payroll processing include doing it yourself with accounting software, hiring a bookkeeper, or engaging a payroll service.