In Human Resource Management, payroll is the list of employees of a particular organization that are entitled to receive payments as well as other work benefits and the amounts that each should receive. Along with the amounts that each employee should receive for work or tasks performed. It usually includes salaries and wages, bonuses, and withheld taxes, or the company's department that deals with compensation. One way that payroll can be handled is in-house, meaning that a company handles all aspects of the payroll process on its own, including timesheets, calculating wages, producing paychecks, sending the AHC (Automated Clearing House), for any direct deposits, and remitting any tax payments necessary.

Payroll can also be outsourced to a full-service payroll processing vendor. When a company chooses to outsource their payroll, timesheets, wage calculations, creating paychecks, direct deposits, and tax payments can be handled all, or in part, by the payroll vendor.

Payroll plays a major role in the internal operations of a business for several reasons. From the perspective of accounting, payroll and payroll taxes are subject to laws and regulations. Payroll usually includes employee exemptions, record keeping, and tax requirements. Payroll errors, such as late or incorrect paychecks, are a sensitive topic that can cause tension between employees and their employers. One requirement to maintaining high employee morale is that payroll must be paid accurately and promptly because employees are very sensitive to any payroll errors.

Frequency
Companies typically process payroll at regular intervals. This interval varies from company to company and will often differ within the company for different employees for large companies.

Many organizations have a monthly interval for permanent employees and may have a frequency from 1st of every month to 30th of that month, where attendance is taken from 1st to 25th of the same month, stating the reason that attendance and salary calculations may take time, at least a week. 

Hence, many smaller organizations with manual payroll, pay for the whole 30 days even if someone is absent between 25th to 30th or 31st, then deduct the money in the coming month's payroll.

There can be times when salaries are also paid on daily basis for contractual employees.

Components
Each employee views their payroll on either a physical salary slip or via an online portal. When viewing this slip, different components are separated from one another yet all tie to complete the transaction.

The first component is Gross Pay or gross income. Gross pay is simply the total amount of compensation that an employee will receive before any deductions or reimbursements are made, including, but not limited to, regular wages, overtime pay, commissions, and bonuses.

The next part of a paycheck is any pretax deductions that may be applicable. These could include insurances, such as health, dental, or life insurance, deductions for certain retirement accounts, or deductions for PPF, etc.

A payslip also includes taxes. Taxes taken out of the paycheck and collected by the employer and then paid to the government.

After the taxes are taken out of payroll, additional adjustments are made in the form of deductions, reimbursements, and garnishments.

After the payroll is adjusted for the different components, the final total that the employee takes home is known as the net pay or net amount of the check. Net pay is the amount that the employee gets to keep for themselves and spend however they see fit.

Component Distribution for CTC Calculation

The above salary structure may vary from company to company.

Outsourcing
Businesses may decide to outsource their payroll functions to an outsourcing service or vendor. These can normally reduce the costs involved in having payroll-trained employees in-house as well as the costs of systems and software needed to process a payroll. Where this may reduce the cost for some companies many will foot a bigger bill to outsource their payroll if they have a specially designed payroll program or payouts for their employees. In many countries, business payrolls are complicated in that taxes must be filed consistently and accurately to applicable regulatory agencies. For Example, restaurant payrolls which typically include tip calculations, deductions, garnishments, and other variables, can be difficult to manage especially for new or small business owners.

Another reason many businesses outsource is because of the ever-increasing complexity of payroll legislation. Annual changes in tax codes, Pay as you earn (PAYE) and Insurance, as well as statutory payments and deductions having to go through the payroll, often mean there is a lot to keep abreast of to maintain compliance with the current legislation.

References:
1. Payroll