The payroll process involves several critical components that must be addressed to ensure timely and accurate compensation. First, employee classification is essential as it determines the applicable pay rate and tax deductions. This is followed by the accurate tracking of employee working hours, particularly for hourly workers. Next, the process includes calculating gross wages, factoring in overtime, bonuses, or commissions, before proceeding to deduct taxes such as federal, state, and social security. Benefits deductions, including health insurance, retirement contributions, and other voluntary deductions, must also be taken into account. After taxes and deductions, the net pay is calculated, and the organization prepares paychecks or electronic payments. A proper understanding of each component of the payroll process is essential to maintain compliance, avoid errors, and keep employees satisfied.