What is Payroll Administration? Importance, Overview, 6 Facts

Payroll administration is the process of keeping track of payroll for your business or organization. This can be done by taking in all the information from the paychecks and paystubs of your employees.

What is Payroll Administration?

Payroll administration refers to the administrative processes involved in compensating employees for their time spent. For example, you may need to measure employee hours worked, set pay rates, and handle payroll.

What is Payroll Administration?

Because of the additional complexity required in administering payroll for employees, payroll administrators are especially valuable for organizations that use a commission system.

Understanding Payroll Administration

Payroll administration for a firm includes a wide range of responsibilities, such as calculating and disbursing employee pay. Those in charge of keeping track of employees’ working hours and correctly dispersing their wages bear the major responsibility.

Calculating and processing tax and Social Security withholdings is also part of the job. Depending on the company, a wide range of deductions may be estimated, withheld, and processed as part of this operation. Processing payments to independent contractors may also fall within this category.

Payroll administration comprises a variety of responsibilities for various enterprises and organizations. Some companies, for example, give their staff a combination of base salary and commission.

Payroll processing at such companies often includes adding commissions to basic pay. This may also entail complying with employment standards relating to designating workers as exempt or nonexempt, instituting a bonus system, calculating when overtime should be paid, and so on, depending on the company’s structure.

What is Payroll Administration?

Payroll issues must also be addressed as part of the payroll administration procedure. This section is responsible for problems such as incorrect payments to employees and unsuccessful direct deposits. Payroll difficulties include errors in reporting revenue or withholding amounts.

A company’s payroll system can range from simple, needing the payment of a small number of employees, to extremely complex, involving the payment of thousands of employees and contractors.

This responsibility may rest on the shoulders of the owner or an employee in very small enterprises.

Some firms, on the other hand, may have a significant number of employees who must be paid and monitored, necessitating a more structured and methodical approach.

Some businesses choose to manage payroll internally and have specialized payroll departments for this purpose. Payroll automation software is generally purchased by these businesses in order to reduce administrative expenses and boost efficiency.

It is fairly uncommon for firms to commission the development of bespoke software, adapting a whole infrastructure to their exact requirements.

Because an increasing number of firms are choosing this option, most, if not all, payroll-related responsibilities are outsourced by the organizations they serve. Some companies also provide management and human resource advice.

What is Payroll Administration?

Services from various suppliers may be tailored to meet the needs of enterprises of various sizes and scopes. Some companies also provide on-site services including payroll consulting.

What Does a Payroll Administrator Do?

Payroll administrators can assist employees who have questions or concerns regarding their paychecks or who need to make a change, such as a change in address or a change in withholdings. They also keep employees informed of changes to the payment system and perk packages.

Payroll administrators must occasionally collaborate closely with organizations as diverse as human resources (HR) and information technology (IT) since payroll touches so many parts of a firm (IT). In some cases, such as an audit, collaboration with federal, state, or local authorities may be required.

Payroll Administrator Responsibilities

  • Helping employees with payroll issues and giving information
  • This work must be completed, whether it is managing an automated timekeeping system or reviewing paper timesheets.
  • Wages, commissions, bonuses, tax, and other deductions must all be computed.
  • Creating and distributing financial reports
  • Payroll processing and electronic money transfers
  • Keeping an eye on employees.
  • Having the HR staff collaborate to ensure correct personnel information.
  • Providing administrative assistance to the accountants.

What is Payroll Administration?

Payroll Administrator Requirements

  • A high school diploma or its equivalent is required.
  • It is suggested that you have a background in business, finance, or accounting.
  • Have at least two years of payroll experience.
  • Proficiency with Microsoft Office and a payroll program.
  • Outstanding mathematical and analytical abilities.
  • Superior communication skills, both verbal and written.
  • The capacity to successfully manage one’s time and resources.
  • Knowledge of the appropriate laws and regulations is advantageous.
  • Managing several tasks and establishing priorities.

What Is The Difference Between a Payroll Administrator and a Payroll Coordinator?

Payroll Coordinator

Payroll coordinators are in charge of communicating with numerous departments as well as the payroll office.

Payroll coordinators operate in large corporations with many employees and divisions. She receives time sheets, requests for time off, and resignation or termination notifications.

A payroll coordinator confirms that all payroll records are accurate after entering timesheet information into the payroll system.

She double-checks payroll entries for correctness and talks with the payroll department to correct errors or reissue checks as needed. To be successful in her liaison function, she must have excellent written and verbal communication skills.

What is Payroll Administration?

Candidates must have a high school graduation as well as appropriate work experience with automated payroll systems, preferably for up to five years.

Common Differences

A coordinator is just responsible for her own section, but a payroll administrator is responsible for the whole company’s payroll. The coordinator works with other payroll department personnel to ensure that time sheets and employee hours are appropriately documented and processed.

A payroll administrator’s job is frequently done alone or with the assistance of another person. The coordinator notifies the payroll office of any changes and submits the necessary signed papers.

In a small business, the payroll administrator administers payroll and communicates with other departments.

Other Considerations

In a small firm, the payroll administrator may also serve as the payroll coordinator. She is in charge of gathering time cards, payroll data, and health insurance benefit papers. She enters employee hours worked into the payroll system.

What is Payroll Administration?

A payroll coordinator and an administrator both deal with payroll, however the latter has less overall responsibility than the former. She is solely responsible for the accuracy of her division’s payroll data. She does not manage all of the organization’s payroll procedures.


Payroll administration is the process of managing an employee’s payroll information. An employer must provide employees with paychecks. However, an employer has certain responsibilities when it comes to the administration of employee payrolls.

For example, an employer must keep records and make sure that employees are paid accurately. It is important for employers to have an effective payroll administration system in place to meet their legal obligations as well as to support smooth operations.

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