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. This system also tracks hours worked, overtime, and benefits, making it essential for maintaining financial records and compliance with labor laws. In addition to processing payments, a payroll system generates reports for management and helps with budgeting. It can integrate with other systems, such as accounting software and human resources management systems, to streamline operations and improve efficiency in managing employee information.