Payroll processing is the administration of employees' financial records, including salaries, wages, bonuses, deductions, and net pay. It involves collecting employee time data, calculating earnings, deducting taxes and other withholdings, and issuing payments. The process starts with setting up payroll accounts and gathering necessary employee information. Next, timekeeping data is verified and input into the payroll system. Calculations are performed to determine gross pay, deductions are applied, and the net pay is calculated. Payments are then issued via direct deposit or checks. Employers must also comply with tax regulations, file necessary reports, and maintain accurate records. Challenges include managing compliance with ever-changing tax laws, ensuring accurate timekeeping, and safeguarding sensitive employee information. Utilizing automated payroll systems can help streamline the process, reduce errors, and ensure compliance. Payroll processing is crucial for maintaining employee satisfaction and meeting regulatory requirements.