Why do bookkeepers refer clients to us?  Bookkeepers do not generally want to delve into the liability issues that a Payroll company deals with daily.

Payroll processing is decidedly different than bookkeeping.  The tools and the mind set are not as similar as the business owner public supposes.  Bookkeeping is the recording of financial transactions, and is part and parcel of the process referred to as accounting in business.  Transactions can include purchases, sales, receipts, and payments by an individual person or an organization/corporation.  There are several standard methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system, but any process that involves the recording of financial transactions is a bookkeeping process.

Payroll on the other hand has very focused meanings.  A payroll is a company’s list of its employees, but the term is commonly used to refer to the total amount of money that a company pays to its employees and a company’s records of its employees’ salaries and wages, bonuses, and withheld taxes.  Payroll in the sense of “money paid to employees” plays a major role in a company for several reasons.

From a bookkeeping perspective, payroll is crucial because payroll and payroll taxes considerably affect the net income of most companies and because they are subject to laws and regulations (e.g. in the US, payroll is subject to federal, state, and local regulations).

From a human resources viewpoint, payroll is critical because employees are sensitive to payroll errors and irregularities:  Good employee morale requires payroll to be paid timely and accurately.  The primary mission of the payroll company is to ensure that all employees are paid accurately and timely with the correct withholdings and deductions, and that the withholdings and deductions are remitted in a timely manner.  This includes salary payments, tax withholdings, and deductions from paychecks.

In brief Bookkeeping deals with all aspects of a company’s income and out go, its financial health.  Payroll focuses down to wages, legal and HR compliance issues, and employee morale.