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Payroll

Payroll vs HR: Differences and Functions of Payroll and HR

By QuickBooks Australia

Published on August 21, 2024

Payroll and human resources (HR) are two important business departments with distinct functions and responsibilities in an organisation. While payroll deals with the financial compensation of the employees and the processes by which they get paid, human resources deals with employee relations. However, certain areas of business such as recruitment, salary increases, bonus payments, benefit deductions, leave and termination often require the attention of both payroll and HR.

In many situations the two departments must coordinate together in order to remain efficient. In fact, the overlapping payroll and HR functions and responsibilities are often carried out by the same person in small businesses. Distinguishing the differences between payroll and HR are important for business owners to understand how the two may work together in harmony.

In this article we will cover the functions, responsibilities and importance of payroll and HR, and how the two departments work together.

What is the function of payroll in business?

The main function of payroll is to calculate and distribute wages, salaries, bonuses and commissions to employees of a company accurately, on time, and in compliance with domestic laws. This function is called payroll processing which may be done manually or through industry payroll software such as QuickBooks Payroll. The function of the payroll department is closely tied with accounting because it deals with all the financial documents of employees. Let’s look at the responsibilities of payroll in more detail.

Payroll processing responsibilities

Payroll processing includes responsibilities such as:

Examining and verifying the accuracy of all documentation
Accurately calculating hours worked by employees
Calculating and processing public holiday pay for employees
Making adjustments to salaries and benefits
Running year-to-date adjustment payments
Preparing unpaid leave estimates
Validating that timesheet information entered by employees has been approved
Processing payroll deductions, tax deductions, super contributions and any other withholdings or applicable deductions from employee earnings
Coordinating direct withdrawals, remittances and deductions and ensuring the transfer of funds to governmental departments and insurance companies
Producing statements of earnings of all non-Australian overseas employees
Addresses any payroll-related inquiries or issues from employees

Payroll accounting and reporting responsibilities

Payroll accounting and reporting responsibilities include:

Reconciling payroll entries
Calculating and adjusting accruals
Maintaining accurate payroll data records ensuring data integrity
Ensuring compliance with payroll rules, policies and legislation
Completing payroll remittances and providing reports for the general ledger on a monthly basis
Completing payroll tax reporting for management or the Australian Taxation Office (ATO)
Providing a comprehensive breakdown of payroll-related charges, such as salary and benefits in order to help managers with the reconciliation of actual costs vs budget
At financial year-end, calculating merit increases (performance-based raises), variable pays, lump-sum payments, super contributions, and salary and redundancy pay accruals

Importance of payroll in business

The importance of payroll in business cannot be underestimated as payroll professionals perform critical tasks that:

Ensure compliant payroll processing: employees get paid on the correct amount on time with compliance to ATO requirements which is vital for maintaining employee job satisfaction.
Maintain wage and tax compliance: payroll professionals must stay up to date with rules around wages, awards and tax deductions to ensure employers are meeting legal requirements and staff is paid correctly.
Provide financial reporting insights: payroll records and reports can provide valuable insights into budgeting and forecasting that can help business make more informed decisions

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What is the function of HR in business?

The main function of human resources is to take care of employee relations with the business. This function is vital for the smooth operation of people and culture within a business and includes:

Recruitment and hiring
Conflict resolution and mediation
Coordinating training and development
Maintaining compliance with HR policies
Managing employee records
Managing remuneration and benefit packages for employees
Coordinating performance reviews

Human resources responsibilities

Human resources managers have many responsibilities to ensure they support employees and the business. Let’s look at the responsibilities of HR in more detail.

Oversee the recruitment and hiring process
Communicating with employers to identify needs and preferred qualifications
Interviewing applicants about their experience, education and skills
Informing applicants about job details, such as benefits and conditions
Contacting references and performing background checks
Hiring or refering qualified candidates
Conducting new employee orientations
Processing paperwork
Plan and coordinate the workforce to best use employees’ talents
Direct disciplinary procedures
Resolve issues between management and employees
Advise managers on policies like equal employment opportunity and sexual harassment
Coordinate and supervise the work of specialists and staff

The importance of HR

HR plays an important role in maximising the potential of an organisations workforce and supporting both employees and employers by:

Ensuring policies are followed: HR holds both employees and employers accountable for their performance and behaviour, ensuring they align with the organisation’s policies.

Resolving conflict: HR plays an important role in establishing processes for submitting and escalating complaints and mediating and resolving conflict between employees and staff members. HR also manages disciplinary action and sets the standard for appropriate behaviour.

Ensuring everyone is trained: Training and development programs are organised by HR to ensure all employees and staff are trained on company policies and procedures.

Payroll vs HR overview: differences between HR and payroll

Let’s look at the key differences between payroll and HR.

Key Differences	Payroll	HR
Main Function	Financial compensation of employees and the processes by which they get paid.	Employee relations and managing the organisation’s workforce.
Key Responsibilities	Payroll processing Payroll accounting and reporting Maintaining payroll records Ensuring payroll and ATO compliance	Recruitment Conflict resolution Coordinating training Maintaining compliance with HR policies Managing employee records Managing remuneration and benefit packages for employees
Key Job Skills	Problem solving Technology proficiency Maths skills	Employee relations Collaborating with teams Organisational skills
Qualifications	The Australian Payroll Association has a variety of courses that will give you qualifications necessary to become a practitioner or a manager in the payroll field.	Various education institutions offer courses in Human Resource Management such as universities, TAFE, the Australian HR Institute and the Australian Institute of Management.
Tools Used	Payroll software such as QuickBooks Payroll Time-tracking software such as QuickBooks Time Clock Kiosk Time-tracking apps such as QuickBooks Timesheet programs and timesheet calculators	Human Resource Management System Talent management systems Onboarding tools LinkedIn Seek

Payroll and HR overlap: working together

For a business to function successfully, HR and payroll must work together to ensure alignment on areas they both cover including compensation packages and bonuses, employee onboarding, leave such as sick leave and annual leave, and employment termination. Alignment between HR and payroll fosters transparency and confidence among employees, leading to greater morale and employee retention. Having the right systems and tools in place allows HR and payroll professionals to collaborate seamlessly.

Finding the right payroll and HR solution

QuickBooks Payroll software simplifies payroll processing and automates complex payroll calculations ensuring greater accuracy by reducing the risk of human error. Having payroll information organised in one place allows payroll professionals to communicate and collaborate more efficiently with HR.

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Payroll vs HR: Differences and Functions of Payroll and HR

What is the function of payroll in business?

Payroll processing responsibilities

Payroll accounting and reporting responsibilities

Importance of payroll in business

Grow Your Business with QuickBooks

What is the function of HR in business?

Human resources responsibilities

The importance of HR

Payroll vs HR overview: differences between HR and payroll

Payroll and HR overlap: working together

Finding the right payroll and HR solution

Frequently asked questions

Related Articles

Looking for something else?

Get QuickBooks

Help Me Choose

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