The Difference Between Accounting and Payroll Administration
While the terms accounting and payroll administration are often used interchangeably, there are significant differences between the two functions and the roles that they play in a business. These differences in roles are reflected in the responsibilities required of accounting and payroll jobs, with each comprising of it’s own particular set of tasks.
What is accounting administration?
Accounting administration is essentially the action or process of keeping financial records, and then analysing, verifying, and reporting the results. An accounts manager may also become involved in budgets and projections for forthcoming financial periods, working with other departmental heads to help them identify likely costs and revenue.
There are a number of different types of accounting, each of which serves a different purpose.
Financial accounting relates to the preparation of financial statements (such as profit and loss, balance sheets, and cash flow) for investors, lenders, Revenue, and auditors to review.
Management accounting is similar to financial accounting but is focused on the production of reports for internal stakeholders, such as management and shareholders. Management accounts are produced frequently (typically monthly or quarterly) and are used to inform day-to-day decision-making.
Tax accounting refers to the preparation of tax returns and tax payments and is an important part of minimising corporation tax liabilities. A larger organisation may have several of these accounting types represented in their accounting department, whereas a smaller business is likely to focus primarily on processing the data required for financial accounting, with some lower-level management accounts reporting also completed for day-to-day cash flow and budgeting purposes.
The conflation of accounting and payroll administration
Payroll generates payments which must be accounted for by the accounts department, which is why payroll processing is often seen as a function of accounting. This is where the confusion between accounting and payroll administration, occurs. It is also the reason for the confusion between accounting and payroll jobs.
However, payroll is a specialism in its own right and requires a detailed and up-to-date knowledge of current legislation. While it is essentially the process by which employees’ salaries are calculated and then paid, payroll also covers the administration of statutory deductions (such as statutory sick pay, statutory maternity pay, and statutory parental leave), the management of benefits in kind and salary sacrifice schemes, pension contribution administration, and adherence to other statutory requirements such as minimum wage legislation. As an organisational function, payroll requires a degree of specialist knowledge and training that is not typically present in a generic accounts department. This specialist knowledge represents the key difference between accounting and payroll administration and is what distinguishes Accounting and Payroll Jobs from each other.
Accounting and Payroll Jobs
The difference between accounting and payroll administration is reflected in accounting and payroll jobs.
Accounts assistants or accounts administrative staff will typically specialise in a particular function, such as accounts payable (processing supplier payments, and tracking what is owed and to whom) and accounts receivable (ensuring that the company receives payments for goods and services rendered and recording these transactions accordingly). In smaller companies, accounts department staff may manage both the recording and processing of the transactions and the analysis and reporting of these amounts, whereas in larger corporations, bookkeepers and entry-level clerks manage the day-to-day recording of expenses and bank reconciliation, with the accounts team focused on processing and analysis. A major difference between accounting and payroll jobs is that accounts administrators typically handle a broader range of monetary transactions than payroll administrators.
Payroll administrators (also known as payroll clerks and payroll processors), focus only on the salary functions of accounting. They calculate the hours, wages, bonuses, commissions, and deductions relating to each employee, and process the resulting payments in accordance with current legislation. They then distribute payslips to the employees and submit the data to Revenue via ROS (Revenue Online System). They process new starter and leaver information, tracking this information on the internal payroll system, and communicate it to Revenue. They record annual leave and sickness, and report on this data to management. Payroll administrators are also responsible for resolving employee queries regarding their wages or errors in salary payments and ensuring that any errors are quickly and accurately remedied.
In summary, while both accounting and payroll jobs can entail dealing with payments, payroll administrators are focused primarily on salary calculations, the legislative requirements that inform them, and payments to employees, accounts staff have a much broader remit, typically focusing either on external payments (such as those to suppliers), or inbound invoice payments expected from customers.
The Payroll Panel: Payroll Talent from Payroll Professionals
The Payroll Panel is a payroll recruitment agency specialising in matching our clients’ payroll job vacancies with talented, experienced payroll professionals. With an established nationwide network of payroll experts and payroll employers, we help talented candidates find their ideal payroll jobs, whether on a permanent, contract, or interim basis. Whether it’s helping candidates find their first payroll job or advancing their career to Payroll Manager, Payroll Analyst or Senior Payroll Specialist roles.
If you are looking to hire payroll people for your organisation, our payroll recruitment services can connect you with Ireland’s largest pool of payroll talent. Whatever the payroll job, we have the right candidate for you. To speak to someone about your payroll vacancies call +353 (0)41 989 4890 or follow the link to submit a payroll job.