Finance or Human Resources: Who should handle your Business Payroll? Check stub makers

Maintaining a timely and efficient payroll system is a salient part of running a business. Technically, this function falls under two departments: human resources (HR) and finance or accounting. So, who should handle the payroll in your establishment? Let us attempt to break things down.

Why is Payroll Crucial for your Business?

The first reason is obvious: your workforce expects to get paid on time for its services. It is natural to demand compensation for one’s time and effort unless the endeavor is charitable. Your payroll mechanism must roll smoothly to send out paychecks to permanent employees, contractors, freelancers, etc. Using a free check stub maker with calculator can streamline this process month on month.

However, the importance of payroll goes beyond the obvious. It helps your business establish a reputation as a decent, reliable employer. Your team is likelier to improve their productivity and work harder if they feel their efforts are being recognized (read: getting paid on time). In the long run, you will minimize your attrition rate and inculcate a positive environment at the workplace.

The need for a steady payroll system guaranteeing on-time and correct pay to employees is even more vital in this post-pandemic world. More employees are working remotely and have flexible work timings and schedules. They require the reassurance of a secure job to hold them in good stead in these turbulent times.

Allocating Payroll to HR: Is it Right for you?

Here are the main benefits of letting HR manage the payroll for your company:

  • Your business is an SME (small and medium-sized enterprise): If your organization has less than 250 employees, it gets classified as an SME. For SMEs, the problem of attrition is far lower than for big corporations. It makes sense to let HR handle the job as payroll becomes personalized.
  • HR understands labor laws and employee benefits: No one has a better understanding of employee benefits like medical allowances, vacation pay, etc., and labor laws at the state and federal level. It is an essential part of payroll for both the company and the employees. Some free check stub makers in the market can help you understand the updated laws, minimizing the scope of error.
  • HR can lend a human touch to payroll: Human resources executives understand subjects like psychology and public relations. It is because HR courses tend to encompass such topics. It makes HR personnel more capable of handling payroll-related grievances.
  • Confidentiality gets priority: Private and confidential data like performance assessments, medical files, etc., gets handled by human resources. If HR also manages payroll, it limits the risk of private data getting leaked to multiple parties and influencing decisions at the workplace.

Allocating Payroll to Finance: Is it Right for you?

Here are the advantages of allocating payroll to the finance team in your organization:

  • The size of your business is large: For organizations with more than 250 employees, keeping track of profiles, salaries, etc., while ensuring growth is challenging. If finance holds the reins, things get done faster and more efficiently. Employing an online paystub generator like can further assist the finance experts in large enterprises. From professional templates to the latest tax forms, you can access it all at your fingertips. It sure beats manual processing!
  • Salary calculations require expert financial knowledge: Your finance team members have the knowledge needed to compute salaries, taxes, etc. A thorough understanding of accounting, bookkeeping, and financial calculations is a primary part of payroll management.
  • Payroll is a large chunk of business expenditure: Typically, paying salaries to your staff will take up at least 15% of your revenue. It can be even as high as 40% or more. Letting the finance team manage such a large sum is a safe decision from a business perspective.

Developing a Harmonious Payroll System

The HR and the finance departments make unique contributions to the payroll component of a business. While your finance team will focus on paying the employees on time, human resources prioritize fostering a constructive work environment. Often, the finance head gets viewed as someone who discards plans and overlooks the humane aspect of dealings. The HR head, on the other hand, must struggle to incorporate strategic decision-making into everyday affairs. It is crucial to justify the costs for activities whose results cannot get directly measured.

As the business owner, it should be your prerogative to cultivate a cooperative relationship between the two teams. While developing a coordinated system, you must demarcate clear boundaries without subordinating one department. Placing one under the other for reporting affects the balance of things and leads to power struggles. When the two functions get performed in sync, it bodes well for the health of your business.


Final Word

Ultimately, choosing the department to handle payroll is a decision that deserves detailed thought and consideration. Frequently, the best course is to get the HR and the finance teams to work in mutual harmony. However, your budget or time constraints may limit you to using only one department. In this case, it is best to ensure that the team you choose develops a thorough understanding of the whole ecosystem. Here, periodic training, knowledge-sharing sessions, and internal audits are helpful. The results – improved employee morale and stable financial health – will be well worth the effort.


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