A payroll system is a software or process used by businesses to manage employee compensation. It calculates wages, deducts taxes, and ensures that employees are paid accurately and on time. Payroll systems can handle various payment types, including hourly wages, salaries, bonuses, and commissions. In addition to processing payments, payroll systems also maintain records of employee hours, benefits, and tax information. They help businesses comply with legal requirements and generate reports for financial analysis. Many companies use cloud-based payroll systems for easier access and integration with other business tools.