Best Business Payroll software

When talking about the best business payroll software, you must first know the relationship between finance and payroll. Conceptually speaking, they are closely related to the extent that payroll is an important input in financial decision making and there are key differences in viewpoints between them. Payroll is a necessary input into finance. That is, payroll is a sub-function of finance.

Payroll generates information or data relating to the operations or activities of the firm. The end-product of payroll constitutes financial statements such as the balance sheet, the income statement (profit and loss account) and the statement of changes in financial position (sources and uses of funds statement). The information which contained in these statements and reports that assists financial managers in assessing the past performance and future directions of the firm and in meeting certain legal obligations, such as payment of taxes and so on. Thus, payroll and finance are functionally closely related.

But there are key differences between finance and payroll. The first difference relates to the treatment of funds and the second relates to decision making. The viewpoint of payroll relating to the funds of the firm is different from that of finance. The measurement of funds (income and expenses) in payroll is based on the accrual system. For example, revenue is recognized at the point of sale and not when collected. Similarly, expenses are recognized if they are incurred rather than when actually paid. The accrual-based payroll data do not reflect fully the financial circumstances of the firm. The viewpoint of finance relating to the treatment of funds is based on cash flows. The revenues are recognized only when actually received in cash (i.e. cash inflow) and expenses are recognized on actual payment (i.e. cash outflow).

Finance and payroll also differ in respect to their purposes. The purpose of payroll is collection and presentation of financial data. It offers consistently developed and easily interpreted data on the past, present and future operations of the firm. On the other hand, the major responsibility of financial manager relates to financial planning, controlling and decision making. Thus, in a sense, finance begins where payroll ends.