Course 1 Overview

Welcome to The Payroll Professional, the first course in ADP's Entry-level Payroll
Specialist Professional Certificate program. This course will introduce learners to the Payroll
Professional certification program and introduce the role and function of the Payroll
Professional. Learners will discover the duties of those who work in the payroll field and the
traits that make them successful. Learners will also explore the basics of pay and the
components that make up gross and net income.

This is an entry-level course intended for beginner learners interested in learning the
fundamentals of payroll, those pursing an entry-level Payroll Specialist role, and more
experienced professionals looking to shift their career to purposefully focus on the area of a
Payroll Professional.

What you will learn:

 Describe the purpose of and requirements to attain the Payroll Specialist Professional
Certificate.
 Explain the value Payroll plays in an organization’s company culture and identify the
factors needed to design a successful payroll strategy.
 Illustrate how Payroll typically fits within Human Resources and an organization and
describe the common responsibilities within the Payroll field.
 Develop a personal plan targeting strengths and areas of opportunity for your Payroll
Specialist Certificate program.

Course breakdown:
Module 1: Welcome!

 Lesson 1: What Can I Expect from this Program?

 Lesson 2: Why is Payroll Important?
 Lesson 3: What Makes Up a Payroll Program?

Module 2: The Successful Payroll Professional

 Lesson 1: How Does Payroll Function Within the Business World?

 Lesson 2: What does a Payroll Professional Do?
 Lesson 3: Where are the Opportunities to Excel?
 Lesson 4: What Makes an Effective Payroll Specialist?

Module 3: The First Step in Your Journey

  Lesson 1: How can I Best Develop My Skills?

Spark Blog: Cultivating Culture from the

Inside Out
Originally published: August 10, 2020

Payroll will always have a strong connection to the world of human

capital management. The actions of a payroll professional can
directly affect the company's culture. Check out this discussion on
the relationship between human resources and company culture.

It's always "five o'clock somewhere" at Margaritaville Resort, but that doesn't mean its
closing time for most of its employees. Open 24/7 and 365 days a year, its staff of primarily
seasonal and part-time team members is on a mission to provide fun and escapism to their
guests around the clock. The leadership team at Margaritaville knows that a great guest
experience begins with a great team member experience, and needed a human capital
management (HCM) system that would allow time to focus on creating and fostering the
culture they desired.

Quick Facts
 Company: Margaritaville Hospitality
 Headquarters: Orlando, FL
 Industry: Hospitality
 Employees: 5000+ amongst all partners

We spoke with Adam Bocken, director of human resources and training and
development, and Hannah Hill, finance manager of the Tulsa location, about how they're
able to spend their time and resources focused on team members and guests, instead of
administrative tasks with the help of ADP®:

On Challenges
Adam: The hospitality industry is a 24/7 business – we're open 365 days a year. It's far from
a Monday through Friday, nine-to-five gig with all salaried team members. We have a lot of
folks that work part-time or on a seasonal basis. We needed a flexible solution that would fit
our needs and help us manage and support our complex workforce, since our competitive
advantage is our people. We prioritize taking care of our team members, because how we
treat our staff tells them how to treat our guests.
Hannah: We have team members that are in and out of all our different venues throughout
the day. Trying to keep that team culture and engagement is sometimes a challenge because
we have such a broad variety of people and places to service. We really try to bring our team
together.

On Partnering with ADP

Adam: Prior to ADP, we had Paycor, which wasn't an all-encompassing HCM solution. it
didn't have the functionality to do talent management or recruitment. We had to piecemeal a
bunch of different software solutions together to get the robust solution that we needed.

We switched to ADP because, as a full HCM solution, ADP is much more attractive. It's flexible
– we have a base system, and can add on each of the modules as needed. There are a lot of
things that ADP offers in an HCM system versus other providers that really keeps it seamless
and organized. ADP is that one-stop-shop we were looking for.

On Saving Time and Resources

Adam: The fact that ADP has the functionality to automate a lot of the processes that we
use has been really helpful. It significantly reduced the administrative burden and allows me
to focus on our locations, our guests and our team members. I no longer have to spend time
worrying about things like whether or not someone got enrolled in the correct medical plan.
It's been a huge time saver for me and for our company.

Hannah: When I first started processing payrolls for Margaritaville, it was about a three-day
process because of the number of timesheets that we run and the complexities of our
departments. We had paper timesheets on clipboards throughout the venue – it was not
efficient or conducive to our needs. Once we implemented ADP, my payroll processing time
decreased from those three days to about half a day. With all the different responsibilities
that I have, that translates to a big time savings.

On Recruiting and Onboarding

Adam: ADP's Screening and Selection Services has been great. Before ADP, securing a
candidate's background check and screening report would take anywhere from 10 to 12 days.
Now, that time has been cut to about three or four days, which has been really helpful in
getting new hires started quicker.

Hannah: I used to have a roll-along cart that had everyone's physical files in it. Once we
began using the ADP New Hire Wizard, we were able to enter our new staff members'
information right into the system, get their tax withholdings set up, IDs entered and all of
their onboarding done in one sitting. It's really helpful to have all of that data pulled right into
the system within just a few minutes, instead of having to carry around a cart full of
clipboards that are 20 pages deep.

On Employee Self-Service
Adam: ADP self-service has really helped to relieve the administrative burden from the HR
side and has made things easier for our team members. When someone needs to change a W-
4 election, an address, a phone number … they just update it in the system themselves
instead of having to fill out a form, send it in and wait for someone else to change it. It has
helped us eliminate mistakes. It's truly been a Godsend.

Hannah: Being able to access and manage all of that data at my fingertips is so valuable to
me. Working with ADP gives me the opportunity to put my focus in other places because I
know that the data and the information is correct and I don't have to process it, manipulate it
or calculate it – it's right there.

How ADP Helps Support

Margaritaville's Mission
Adam: Worrying about the details of payroll and HR is kind of the antithesis of what
Margaritaville really is. Our core purpose is to create and deliver fun and escapism. ADP helps
us focus on our guests and on our team instead of worrying about the minutia and the details
of administering all these processes.

Hannah: ADP really frees up our time to be able to recognize and engage with our staff
members and guests in real time around the venue, versus being upstairs behind closed
doors sitting at a desk for hours on end. We can focus on bringing fun to work and rewarding
the work ethic that our team brings our venue. When we're not burdened administratively,
we're able to develop and tighten our relationships with our team members and our
leadership and provide the best guest experience that we can for our patrons.

On Scalability
Adam: The Margaritaville brand is growing, and one of the biggest advantages of partnering
with ADP is that it's able to scale with us. We can add different modules that support our
growth as we go forward. For instance, we started with ADP Workforce Now® and the time
and attendance module, and from there we've added modules every year or so based on our
overall needs and as new products and enhancements became available.
On ADP Enhancements
Adam: ADP is constantly evolving and getting better at creating systems that work in the
real world. The difference between ADP when we first implemented it five years ago to where
it is now has been huge for us, and has kept us a client. It's kept us from looking elsewhere for
a different system because ADP is recognizing where the deficiencies are, and there are
enhancements every year. ADP talks to the folks that use it every day to understand what the
challenges are, and then focuses on creating solutions to fix them. ADP is my favorite HCM
system that I have ever used.

The views expressed on this blog are those of the blog authors, and not necessarily those of
ADP. This blog does not provide legal, financial, accounting, or tax advice. The content on this
blog is “as is” and carries no warranties. ADP does not warrant or guarantee the accuracy,
reliability, and completeness of the content on this blog.

ADP, the ADP logo and SPARK Powered by ADP are registered trademarks of ADP, Inc. All
other marks are the property of their respective owners. Copyright © 2025 ADP, Inc. All rights
reserved.

The first step in your journey to a career in payroll begins with a

question: What is payroll? What does it involve? Check out this post
from ADP for a deep dive into payroll processing.

Common frequently asked payroll

questions and answers
Processing payroll means compensating employees for their work. It involves calculating
total wage earnings, withholding deductions, filing payroll taxes and delivering payment.
These steps can be accomplished manually, but an automated process is usually more
accurate and efficient and may help you comply with various .

How do you manually process payroll?

If you’re a small business with only a few employees and choose to process payroll manually,
you will need to keep precise records of hours worked, wages paid and worker classifications,
among other details. You must also ensure your calculations are correct and remember to file
all the necessary taxes and paperwork with government authorities on time. As you add more
employees, the more challenging payroll becomes and any mistakes you make can result in
costly tax penalties.
Payroll’s impact on cash flow
Even if you’re not paying someone else to do payroll for you, it’s still considered a business
expense. This is because your employees’ wages and your share of payroll taxes cut into your
profit margin. And if business slows down, you may be faced with the difficult decision of
delaying payments or diverting money from other resources.

One way to limit payroll’s impact on your cash flow is to pay your people using direct
deposit or digital pay options instead of paper checks. Because you don’t know when
someone will cash a paycheck, it becomes more difficult to ensure you always have sufficient
funds in your bank account. With direct deposit, you only need to cover the cost of payroll on
certain days of the month, allowing you to better manage your finances. Plus, going digital
cuts the expense of printing paper.

Payroll requirements
Certain aspects of payroll processing are regulated by the Internal Revenue Service (IRS) and
the Department of Labor (DOL). Some of the laws you must comply with include:

The FLSA entitles nonexempt workers to a minimum wage of not less than $7.25 per hour
(effective July 24, 2009) and overtime pay at a rate not less than one and one-half times the
regular rate of pay after 40 hours of work in a workweek. This means that you need an
accurate means of tracking time and attendance so you can apply overtime wages in
accordance with the law.

The FLSA also requires you to keep certain records for each nonexempt worker. Payroll
records, for example, typically include hours worked each day, total hours worked during the
workweek, the basis on which employee wages were paid, regular hourly pay rate, total
overtime for the workweek, date of payment and the period covered, and total wages paid
each period. These records must be kept for at least three years and the records on which
payroll calculations are based, such as time cards, need to be kept for two years.

The Federal Insurance Contributions Act (or FICA) requires that a portion of every employee’s
gross earnings help pay for Medicare and Social Security benefits. Each pay period, you must
deduct 6.2% for Social Security tax (until the wage base is met) and 1.45% for Medicare tax
(and an additional 0.9% in Additional Medicare Tax for wages above $200,000 each year).
You’re also required to match these deductions (except for the Additional Medicare Tax),
which brings the total FICA tax per employee to 15.3% (or 16.2% for employees subject to the
Additional Medicare Tax).

Most employers contribute to the federal and a state unemployment programs that
compensate workers who have lose their jobs. As such, FUTA is not a payroll deduction
because it only applies to employers, not employees. To comply, you must pay 6% in taxes on
the first $7,000 you pay an employee in a year. Exemptions may apply, however, if you have
household or agricultural workers.

Payroll processing state by state

requirements
In addition to federal requirements, you must abide by state payroll processing laws. Each
state has its own guidelines, some stricter than others, governing minimum wage, payday
schedules and recordkeeping. So, if you’re conducting business across state lines, your
payroll compliance becomes that much more difficult.

A good way to stay compliant is to work with an executive or someone from your legal
department to compile a list of all the labor laws that apply to your organization. Ask that he
or she track changes to existing laws and document any new laws being proposed. Review
these findings on at least a monthly basis so you can adequately adapt your operations and
avoid penalties.

Apply for an EIN

An employer identification number (EIN), also known as federal employer identification
number (FEIN), is a nine-digit number (format: 00-0000000) the Internal Revenue Service (IRS)
uses to track your organization for tax purposes. Think of it as a Social Security number for
your business. You can apply for an EIN free of charge online or by sending Form SS-4,
Application for Employer Identification Number (EIN) to the IRS. Once approved, it can’t be
cancelled and will stay associated with your organization for as long as you stay in business.
Some state and local governments may also require you to have a separate tax identification
number.

Documents required for payroll

Before you begin processing payroll, you generally need to gather these documents, some of
which may be required by government agencies:

 Form W-4, Employee’s Withholding Certificate: On their first day of work, new hires
usually complete a Form W-4, Employee’s Withholding Certificate, which you will use
to deduct the correct amount of federal income tax from their pay. Although not
required, your employees should fill out a new form each year if their personal or
financial situation changes. Most states and some localities also have a withholding
certificate that employees should complete.
  Form W-9, Request for Taxpayer Identification Number and Certification: If you hire
freelancers, or independent contractors, you should ask them to provide their name,
address and Social Security number or tax identification (ID) number on a Form W-9,
Request for Taxpayer Identification Number and Certification. This document is for
your records and does not get sent to the IRS. At the end of the year, you will use the
information on the Form W-9 to file a Form 1099-NEC, Nonemployee Compensation,
which shows how much you paid independent contractors.
 Form I-9, Employment Eligibility Verification: In the United States, use Form I-9,
Employment Eligibility Verification to verify the identity and employment
authorization of any individuals you hire. Employees must fill out this form no later
than their first day of work for pay. Once they do, you have three business days after
the first day of work for pay to complete and sign Section 2. Employees also need to
present documents, such as a passport or a combination of documents such as
driver’s license and social security card or other employment authorization document,
and must attest to their employment authorization. Forms I-9 are not sent to a
government agency unless requested by an authorized representative of the
Department of Homeland Security.
 Job application: Although candidates often supply a resume, job applications help you
obtain consistent information about potential new hires. Most require a signature,
verifying the accuracy of the details, which you can use to start preparing a payroll
record for anyone you decide to hire.
 Bank information: If you plan to offer direct deposit, you will need your new
employees to provide you with the name of their bank and an account number and a
routing number. Or, they can supply a voided check.
 Medical insurance forms: You may have the best intentions and truly care about your
employees’ health, but you can’t deduct insurance premiums from their pay without
first obtaining written authorization.
 Retirement plan documents: Like health benefits, retirement plans are a voluntary
payroll deduction and generally require an employee’s signature before you can
withhold contributions to a 401(k) or other retirement account.

How to classify workers

In order to comply with federal payroll tax laws, you need to properly classify your workers as
either employees or independent contractors. The general steps to do this are:

1. Assess the nature of the work being done. Employers must review
federal and state laws regarding worker classification, as different tests may
[Link] often look at factors such as the amount of control that a company has
over how the worker completes his or her tasks.
2. Determine if payroll deductions apply. Withhold income tax, Social
Security tax and Medicare tax (and other applicable state and local taxes) only on
 wages paid to employees, not independent contractors. These types of workers pay
self-employment tax on their income.
3. File Form W-2, Wage and Tax Statement with the IRS for
employees. Include all forms of compensation paid to employees, including
wages and tips, as well as the taxes that were withheld and any other required
information.
4. File Form 1099-NEC, Nonemployee Compensation for
independent contractors. You generally must report payments of $600 or
more to nonemployees. The completed form gets sent to both the IRS and the worker.

Pay particular attention to details when determining a worker’s status. Misclassifying workers
can result in penalties, and you may be responsible for any unpaid wages, including overtime.
If you need help determining the status of a worker under federal law, you can submit Form
SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income
Tax Withholding to the IRS.

What is a typical payroll cycle?

The most common payroll cycle or pay period in the United States is biweekly. See how it
compares to other payroll frequencies:

Payroll Cycle Paychecks Per Year

Biweekly 26 (or 27 in certain years)
Weekly 52 (or 53 in certain years)
Semimonthly 24
Monthly 12

Payroll schedule considerations

To some extent, payroll schedules are a matter of preference, but minimum standards may
apply. Some states require at least semimonthly payments for all employees, while others
have specific frequencies for different types of workers. Within these requirements, you can
choose whichever pay period works best for you and your workers. Employees, especially
those in low-wage jobs, usually prefer to be paid more often, but as your pay frequency goes
up, so does your payroll processing costs. You’ll need to carefully weigh the expectations of
your workforce and your budget and comply with all state laws.

Create a payroll policy

To ensure that your payroll is accurate, processed timely and in accordance with all
requirements, you’ll need to establish guidelines with both your employees and your payroll
department. A typical payroll policy covers:
Clearly defined workweeks are necessary to comply with FLSA overtime requirements, as well
as state wage payment laws. You can choose when your workweek starts and ends, but they
typically must constitute seven consecutive 24-hour periods.

Accurate payroll begins with precise timekeeping. Your employees should know how to log
their hours – time clock, paper timesheets, etc. – the approval process, and disciplinary
action for submitting false records.

The federal government does not require lunch or meal breaks, but most states do. When
offering rest periods, clearly define their length and let employees know if the break is paid or
unpaid and if they need to clock their time.

Explain who is eligible for overtime pay and how the rate is applied. Nonexempt employees
covered by the FLSA must be paid no less than the applicable minimum wage (federal, state
or local) for all hours worked and at least one-and-a-half times their regular rate of pay for
each hour worked over 40 in a workweek. If your state also has overtime requirements, you
must follow the law that provides the most generous benefit to the employee. For example,
California requires one and one-half times an employee’s regular rate of pay for all hours
worked over eight hours in any workday and over 40 hours in the workweek. Additionally, CA
has a requirement for the payment of double time, which is not required by the FLSA.

Document how often you will pay your employees. Weekly, biweekly and semimonthly are
the most common. Also note which specific day of the week will serve as payday.

Make clear all the federal, state, and local taxes that will be deducted from your employees’
paychecks. Include information on the forms they need to complete to get their withholding
amounts correct and how wage garnishments work.

If you offer your employees health insurance or retirement plans, explain the costs and how
they can participate. Also provide information on paying for benefits on a pre or post-tax
basis.

Be transparent about the different ways employees are compensated at your business, such
as hourly pay, salary, bonuses, commission or stock options. In addition, pay careful
attention to state laws covering the payment of final wages to those who leave your
organization.

The FLSA and state authorities require payroll records to be kept on file for certain periods of
time. Document the recordkeeping laws that apply to you and how you will maintain
confidentiality.

Designate a payroll manager

Every business needs someone to administer payroll. You can hire an employee specifically
for this purpose, but in most small businesses, the role is filled by an office manager, human
resources director or even the owner. As a result, many payroll administrators
have responsibilities beyond simply running payroll. They’re often tasked with providing
customer support and answering employee questions, analyzing the payroll system, keeping
up with legal requirements, working with auditors, and troubleshooting technical errors.

Those who excel as a payroll manager have a specific skill set. They tend to be detail-
oriented, organized, analytical and technically inclined. Their success, however, requires the
collective teamwork of employees, managers and the human resources department. For
example, workers must submit accurate information and managers need to promptly
approve timecards in order for payroll to be processed correctly and timely.

Track employee time and attendance

How your payroll administrator manages time and attendance – whether it’s a time clock, a
mobile app or a pencil and paper – is entirely up to you. Keep in mind, however, that doing it
manually opens the door to human error. You can help eliminate many of these mistakes,
speed workflows and make the payroll manager’s job easier by using an automated time and
attendance solution that integrates with payroll.

Calculate taxes
As an employer, you’re responsible for calculating and withholding money for federal, state
and local taxes from every employee’s paycheck. The amount you withhold is determined by
the Forms W-4 (and state and local tax withholding forms) submitted by your employees and
current tax rates. In addition, the United States government requires that you pay federal
unemployment tax (FUTA) and match what your employees pay in Social Security and
Medicare taxes (except for the Additional Medicare Tax).

Withhold additional payroll deductions

Employees can choose to have you withhold money from their wages to fund retirement
plans, insurance premiums and for other purposes. Each of these requires a consent from the
employee . Sometimes, you must also withhold deductions for court-ordered garnishments,
such as child support and alimony.

Pay statement compliance

Most states require you to provide employees with a pay statement in either print or
electronic format at the time wages are paid. Some laws allow employees to opt in or out of
electronic statements and you may have to ensure they are able to easily view or print their
pay statement.

The goal of these requirements is transparency. Common requirements include hourly rate,
total hours worked, gross pay, and deductions are usually required details. Some states have
extensive requirements and can impose significant penalties or expose employers to
employee lawsuits if any information is missing or inaccurate. Minimize your risk of violations
by reviewing state requirements and contacting state labor departments with any questions.

How to issue paychecks

You can purchase check stock from the bank that has your payroll account or a stationary
supply store. When placing your order, make sure that the check stock is designed to prevent
fraud, uses ink that can be interpreted by bank check readers and has all of the necessary
information. Once printed, checks, will need to display your business name, the employee’s
name and address, the check number and date, and the bank’s name and address. Once the
checks are printed, seal them in a double-window envelope so that the destination and
return addresses are visible but other information is not visible, apply the appropriate
postage and put them in the mail. This process can be simplified by using a payroll service,
which in some cases includes paycheck delivery.

Direct deposit vs. pay cards

Printed paychecks were the tried and true method of compensation for many years, but
thanks to technology, there are more efficient and less expensive ways to pay your
employees. Two such methods in use today are direct deposit and pay cards.

Direct deposit electronically transfers money from your payroll bank account to the personal
bank account designated by an employee. The transaction is fast and most banks don’t
charge for it. For these reasons, direct deposit has surpassed printed checks as the preferred
method of payment. However, employees must have a valid bank account and it can
sometimes take up to two weeks to set up.

A more recent payment option that’s growing in use are prepaid debit cards or payroll cards.
They’re ideal for workers who don’t have a bank account, but still want immediate access to
their pay.

Whichever wage payment methods you choose to offer to your employees, be sure to review
all state-specific requirements. Most allow electronic payment, but there are states where it
cannot be the only option.
How can I improve my payroll
process?
Long hours spent on administrative work and responding to letters from the IRS or court
orders for wage garnishments are tell-tale signs that your payroll process could use some
improvements. Here are some tips to streamline your operations:

1. Unify your pay periods: Paying different types of workers on different

schedules (i.e. paying hourly employees weekly and salaried employees semimonthly)
complicates payroll. Find a pay period that complies with state laws and works best
across your entire workforce.
2. Invest in payroll software: The automated features available in payroll
software eliminate repetitive tasks, like manual data entry. This reduces errors, saves
time and can help improve compliance.
3. Integrate your payroll with other processes: Many types of payroll
software can be seamlessly integrated with time clocks and accounting ledgers. When
these operations are in sync, you may have more accurate payroll calculations.
4. Use digital timekeeping solutions: Paper timesheets often lead to
mistakes. Time tracking software uses biometric identification (when permitted by
law) to prevent fraud and automatically calculates the hours worked.
5. Keep current with legal requirements: Laws governing payroll and
employment are constantly changing. Staying informed of the latest requirements will
help you maintain compliance and avoid expensive penalties.
6. Work with a payroll service provider: Often, the surest way to improve
your payroll process is to work with a provider who can handle many aspects of
payroll on your behalf. You may have peace of mind knowing that your employees are
paid on time and your taxes are prepared correctly.

Payroll processing FAQs

See what other employers are asking about payroll processing:

How long does payroll take to process?

The method you choose to process payroll will determine how long it takes. Manual
calculations can take hours to days, depending on how many employees you have and the
laws that you must comply with. If you’re a large business that operates across state lines,
processing payroll this way is usually unfeasible. A more efficient approach is to use payroll
software, which can run payroll in minutes thanks to automation.
What is full-cycle payroll processing?
The amount of time in between each pay day is known as a payroll cycle. It can be as short as
a week or as long as a month. During this period, several repeatable steps take place:

 Employees work and track their hours

 Gross pay is calculated based on hourly wage for hourly employees, or in another
manner for non-hourly employees
 Taxes are calculated an withheld from wages, along with other deductions
 Net pay is delivered to employees via paycheck, direct deposit or pay card

What is end-to-end payroll processing?

End-to-end payroll processing integrates payroll with other aspects of workforce
management, such as performance measurement, training, scheduling, benefits and
compensation. By making this connection, you can improve communication, recordkeeping,
analytics and efficiency throughout the employee life cycle.

Why is the payroll process important?

Payroll processing is important because paying employees late or filing taxes incorrectly may
result in penalties and interest on back taxes. Payroll that’s unreliable can also hurt employee
morale and tarnish your business reputation. When you consider these ramifications, it’s
often best to dedicate the necessary resources, whether it’s time or money, to make sure you
get payroll right.

What is needed to process payroll?

A payroll process must be in place before you hire your first employee. You generally will need
to:

 Apply for a federal employer identification number (EIN)

 Obtain state and local tax identification numbers, if applicable
 Gather employee tax documents (Form W-4, Form I-9 and similar state and local
documents )
 Complete a Form W-9
 Open a bank account specifically for paying employees and taxes
 Hire or designate a payroll manager
 Develop a payroll schedule
 Create a company payroll policy
What are the types of payroll
processing?
When it comes to processing payroll, you have several options to choose from, depending on
the size of your business and individual needs. The most common are:

 Do it yourself (DIY)
 Outsource payroll to an accountant
 Purchase payroll software
 Work with a managed payroll provider

This guide is intended to be used as a starting point in analyzing an employer’s payroll

obligations and is not a comprehensive resource of requirements. It offers practical
information concerning the subject matter and is provided with the understanding that ADP
is not rendering legal or tax advice or other professional services.

ADP, the ADP logo and SPARK Powered by ADP are registered trademarks of ADP, Inc. All
other marks are the property of their respective owners. Copyright © 2025 ADP, Inc. All rights
reserved.

Spark Blog: Should Payroll Report to HR or

Finance?
Originally published: January 3, 2023

Just as payroll has strong connections to HR, it too has connections

to finance. How should this relationship play out across a company's
hierarchy? See below for one perspective.

As a leader in payroll processing and outsourcing, ADP is frequently asked many questions
about payroll and what are "leading practices." Another such question is "Where should
payroll report?" (e.g., to HR, to finance, or elsewhere). And, in true advisory fashion, the way I
would answer this question is, "It depends."

In this article, I'll review what the market benchmarks demonstrate and offer some
considerations to deliberate when deciding what is best for your organization.

Market data
Consider these benchmarking sources that address this issue:
REPORTS TO FINANCE
A survey of global payroll by ADP of 1,100 respondents around the world indicates that 43
percent of survey respondents reported that finance functional leads manage
payroll, with 33 percent reporting "other" and the remainder (24 percent) reporting HR.

SPLIT REPORTING TO FINANCE AND HR

A global payroll benchmarking survey by Deloitte of more than 1,400 respondents around the
world found that survey data was almost split between HR and finance in terms of
reporting structure: Thirty-eight percent of survey respondents said that payroll reported to
HR, 36 percent to finance, 24 percent to shared services, and the remainder (2 percent) to
"other."

REPORTS TO HR
A global payroll survey by EY of 128 respondents found that 57 percent of
respondents currently report to HR (29 percent to finance) and another 49 percent
felt that payroll should report to HR (33 percent to payroll).

What do we make of this?

Well, the answer is a mixed bag. Also, a general rule of thumb when reviewing benchmarking
studies and surveys to keep in mind is that usually you prefer a response rate of at least 20 in
order to report out on the data; the larger the data and the more diverse in terms of industry,
size, and region, the more "representative" it is.

Taking the two highest response rate options from the survey research above (e.g., payroll
reports to finance versus payroll reports to HR), let's further explore some considerations for
each.

Reporting Structure
Considerations
Payroll Reports to Finance
The truth of the matter is that payroll naturally "fits" within the finance function: It is a
financial activity, involving the movement of money, just like other activities generally
considered within finance, such as travel and expense, accounts payable, and accounts
receivable. For example, nonprofit business process management advisory firm APQC
includes payroll processing in its Process Classification Framework taxonomy under financial
management.

In terms of skills, finance and payroll both share the same need for detail orientation,
reporting, auditing, the use of technology and an emphasis on compliance and internal
controls.

Analytics is another hot skill set: Both finance (in particular, with respect to planning,
budgeting, and forecasting) and HR (in particular, with respect to strategic workforce
planning and people analytics) have been working to scale the maturity curve for years.
Payroll departments seeking to scale the analytics maturity curve would therefore be well-
placed in either the finance or HR organizations.

The CFO is the guardian of money matters within the company, and as such, often has great
sway in any kind of technology purchasing decisions, which may work in payroll's favor if it
reports to finance. That said, HR has evolved into a strategic player with a "seat at the table"
at many organizations and has its own say into key organizational decisions. In fact,
according to a recent SHRM study on HR staffing and resources from 417 respondents, 61
percent of HR functions now report to the CEO, president, or owner of the company, which
means that HR at these organizations has a voice.

Payroll Reports to HR
One of the biggest trends in the human capital world these days is the focus on the Employee
Experience (EX). By reporting to HR, payroll will fly under the EX banner and potentially be
more likely to focus on EX initiatives such as self-service, mobile, pay cards, and earned wage
access. And where a department or function "sits" within an organization does, perhaps
subtlety, send a message to the organization about what is important to the organization:
Having payroll report to finance may signal that the organization is focused on the budget,
cost control and efficiency; whereas having payroll report into HR may indicate that payroll is
acknowledged as a key part of the overall employee experience.

Finally, many organizations these days are focused on "total rewards" programs for
employees, which strategically manage employee compensation, benefits, retirement, and
incentive programs. Payroll is a key part of total rewards programs with direct linkages from
benefits to payroll via deductions, and therefore organizations with an emphasis on total
rewards may consider locating payroll within the HR umbrella.

The table below summarizes some of the key considerations to think through with respect to
reporting structure for payroll.
What is the "right" answer for
where should payroll report?
The answer is that it depends: You need to do what is right for your company and your
culture. There is no one "right" answer. And furthermore, payroll at some companies reports
neither to finance nor HR, but rather directly to the CEO, to shared services or to some other
function. And to add further nuances to this discussion, at some organizations HR reports into
finance, and at others both functions may report separately into operations, shared services,
or the CEO or payroll tasks may even be split up between finance and HR. There are many
variations in reporting structure that can occur.

A solid practice regardless of where payroll reports — since payroll and HR are so
interconnected — is to create a RACI chart (Responsible, Accountable, Consulted, and
Informed) for key processes that intersect to ensure that there are clear roles and
responsibilities and that there are clear and documented transitions at the process handoffs.

And from a systems perspective, if HR and payroll are using different software platforms,
automated integrations are going to be key to prevent errors and rework. Ensuring both
functions understand and speaking the language of the business can also help cross-
departmental measures, as can building financial or cost Key Performance Measures for HR
(such as cost per hire, revenue per employee) that finance will relate to.

The views expressed on this blog are those of the blog authors, and not necessarily those of
ADP. This blog does not provide legal, financial, accounting, or tax advice. The content on this
blog is “as is” and carries no warranties. ADP does not warrant or guarantee the accuracy,
reliability, and completeness of the content on this blog.

ADP, the ADP logo and SPARK Powered by ADP are registered trademarks of ADP, Inc. All
other marks are the property of their respective owners. Copyright © 2025 ADP, Inc. All rights
reserved.

Spark Blog: Global Payroll 101: Understand

These Key Terms
Originally published: September 25, 2023

Last updated: April 14, 2024

The challenges faced by a payroll department vary based on the size

and scope of the business they serve. Check out the article below to
see the challenges faced by some payroll professionals.
Are you a payroll professional working for an organization that has recently expanded
operations to international markets through organic growth and/or acquisition? Or are you a
purchasing, procurement, finance, or IT professional, familiar at a high level with global
payroll operations but not versed in-depth in the lexicon? If so, welcome to this fascinating
world!

While there are many complex operational considerations for paying employees
internationally, the purpose of this article is to help those newer to global payroll (whether
they are in the payroll function or otherwise) understand some of the most common key
terms used by seasoned global payroll professionals and providers alike. We have explained
these key terms alphabetically below for ease of reference.

Key terminology in global payroll

Here are some of the most common terms, phrases, acronyms, and/or concepts that are
helpful to understand in the realm of global payroll.

Best of breed (BOB)

The terminology "best of breed" is used to refer to software solutions that are leaders in the
marketplace for their particular niche, like a software solution that is well known in the
marketplace for high performance in learning management. In the context of global payroll,
however, "best of breed" or BOBs primarily refer to local, country-specific payroll solutions
selected to cater to the needs of the employee population in that specific country. The focus
for these solutions is not necessarily on integration or data visibility across the enterprise;
rather, it is on meeting the country- or employee population-specific requirements. Often, an
organization may select BOB solutions as part of a decentralized payroll service delivery
approach.

Employer of record (EOR)

An Employer of record (EOR) is a service offered by organizations that (for a fee) serve as the
legal employer operating in a country on your organization's behalf, handling tasks such as
hiring, terminations, and payroll in that country. This is also called a Global
Employment Organization (GEO) when hiring outside the global headquarters
country. The advantage of leveraging an EOR for international payroll is that an organization
doesn't have to establish a subsidiary or legal entity in the country; rather, the EOR serves as
the de facto local employer from a legal and financial standpoint. Oftentimes, organizations
may consider an EOR approach for global expansion where they have a handful of countries
with one or a few employees and want to outsource the legal and financial tasks to another
company that has expertise (including compliance and regulatory expertise) in such matters
for international locations.

Expatriate / Inpatriate
Whether a worker is an expatriate ("ExPat") or an inbound expatriate (“inpatriate”) depends
on the point of reference of the HR or payroll person working with them. Both terms refer to a
person residing and working in a country other than their home country. For example, if a U.
S. citizen is on assignment and working in France, they would be an expat on the U.S. payroll
(the "home country" payroll). That same U.S. citizen on assignment and working in France
would have an impact on the payroll for France (the "host country" payroll). The employee
would receive their pay from the “home country” payroll. "Shadow payroll" is often
processed in the “host country”, in parallel to the “home country” payroll and used to comply
with local tax and reporting requirements.

Global payroll
In contrast to selecting individual BOBs for payroll in each specific country, a global payroll
approach and strategy seeks to standardize and optimize payroll providers on one (or few)
payroll providers (such as ADP) that have global capabilities. The focus in choosing a payroll
provider is on provider optimization and standardization, automation, data visibility,
reporting and analytics, and payroll governance for the enterprise.

Global business services

Shared Services Centers (SSC) typically centralize and deliver a menu of transactional
services to internal clients in a "business within a business" model. They typically leverage
Service Level Agreements (SLAs), with defined and agreed-upon Key Performance Indicators
(KPIs). They are also often characterized by internal charge-back mechanisms whereby the
SSC "charges" the business for its services. Shared services are generally leveraged by at least
mid-sized to large, decentralized, or distributed organizations. Global Business
Services (GBS) take shared services one step further and are used by multinational
organizations. GBS features multi-function SSCs (e.g., finance, HR, IT, etc.) that serve the
enterprise.

Global system of record

An HR System of Record (SOR) refers to the primary database where employee data resides.
Ideally, the HR SOR automatically integrates so that data "flows" with minimal manual
intervention into other important systems, such as the payroll system and the Time &
Attendance system. The SOR is considered the "single source of the truth" for employee data.
A Global System of Record (GSOR), then, extends this concept to mean one unified HR system
for the enterprise around the world.

"Long tail"
In the context of global payroll, "long tail" refers to a situation where an organization has
numerous countries where it operates and pays employees, but the number of employees
paid in each location is few (e.g., five or fewer). If you were to chart the number of employees
by country, it would look like a long tail. This situation results in a lot of administration by the
payroll team(s) to not only pay employees correctly but also keep up-to-date with various
SLAs of the different payroll providers and with all the varied legal and compliance
requirements in each country. Long-tail payroll and its associated complexities are often one
of the drivers for organizations to optimize and standardize their payroll providers globally
and to strategically outsource payroll activities to those providers with experience running
payroll in the international locations where the organization has a presence.

Conclusion
The world of global payroll is full of excitement but also has its challenges. An understanding
of key concepts and terminology is foundational for payroll professionals who are new to the
realm of global payroll and for those who are in other functions, such as procurement, IT, and
finance, who contribute to the organization's move toward a global payroll strategy.

Spark Blog: The Importance of Paying

Independent Contractors on Time
Originally published: August 20, 2020

Customer service within a payroll department extends well beyond

fixing mistakes. Paying your people on time is the best kind of
service you can offer. This is true even of your contract workers.
Most contingent workers have multiple clients, so you can help
ensure that you're getting the best of their working hours by paying
your contractors quickly.

Of course you should pay your contractors on time, right? Yu-kai Chou, an expert on human
motivation and behavioral science, has found that some business leaders actually believe
that withholding payment for contingent workers, or contractors, is a savvy cash-flow
management practice. So, there are those who feel it's an advantage to delay contractors'
payments, but this can harm your business in several ways.
"People are not robots," Chou says. "They have feelings, emotions, insecurities, dreams, and
needs. When a HUMAN is wondering whether they would get paid on time or not, they are not
working as hard or creatively as they could be, and you are literally getting less for the same
money you pay (assuming you intend to pay them in the first place, which would also be a
savvy business thing to do)."

Why isn't it good business

practice to delay contractor
payments?
An independent contractor, also known as a contingent or gig worker, is someone who does
work for another person or company. When you use an independent contractor, you direct
the result of their work, but the contractor generally chooses how and when to do the work.
29 percent of American workers currently participate in the contingent workforce to some
degree, according to a daVinci Payments report from last year. The same report cited that 86
percent of independent contractors prefer this method of work and 80 percent plan to do
more.

If you found a highly competent independent contractor who contributed to the growth of
your business, would you want to risk losing them to a competitor for not receiving their pay
on time? According to ADP Research Institute, one in every six enterprise workers (those who
work for a for-profit company with more than 1,000 employees) is a gig worker. In many
cases, the number is even higher. In about 40% of enterprises, one in four workers is a gig
worker. Independent contractors have the ability to choose to work for organizations that
offer the best circumstances. Getting paid quickly is often the expectation and need for gig
workers, who don't enjoy the benefits of a consistent paycheck.

In addition, if your independent contractors are worried, they won't get paid promptly, they
might not dedicate their full effort to your projects. Let's say you hire a video producer to
create a series of marketing videos for your business. His best hours, when he is most creative
and productive, are 6:00 – 9:00 a.m. The video producer is working on several projects for
multiple clients. Whose project do you think he is going to work on first, during his optimal
creative time: The one who pays him quickly, or the one who pays according to their own
schedule, or whose payments may be delayed by manual processing?

Most contingent workers have multiple clients, so you can help ensure that you're getting the
best of their working hours by paying your contractors quickly. "Our brand and reputation are
important to us, not just with clients and prospects but also with our extended workforce. We
focus on paying our own freelancers timely when they help us with marketing projects
because we know they have a choice of which clients to take on," says Cindy Hustveit, head of
marketing at WorkMarket, an ADP company.

PYMNTS, a leading provider of online coverage of the procurement industry, reports that 84
percent of gig workers struggle to pay their bills. Having a system in place to track and pay
contractors efficiently can help build strong working relationships with contractors by
providing consistency and trust. While most contingent workers will complete an assignment
with slow payment due to their work ethic and commitment, delayed payments can affect the
quality of their work and make them less likely to work with you in the future. Losing good
contractors will cost you each time you have to familiarize a new person with your
organization and project to replace them.

Lastly, delayed payments can also interfere with your productivity when contractors call or
email to inquire about their payments due to the time it takes time for your staff to respond.

Streamline payment of your

contingent workers
Many HR and finance departments are still using manual recordkeeping and paper checks to
pay contractors. This can slow down payment and isn't as convenient as the digital payment
methods available. According to a Fiserv report, 31 percent of contingent workers have been
paid with a paper check, while only 13 percent of them preferred them. The same report
found that 80 percent of workers prefer to be paid electronically.

Contingent workers have tight networks and a sense of community. If you want to maintain a
positive reputation and engage the highest quality contingent workers, it makes sense to pay
them promptly and in the manner they prefer.