Payroll is one of the most visible parts of your business. It influences employee trust, tax filings, and the overall flow of operations. For small business owners trying to make smart decisions, one question comes up often: Does HR handle payroll?
What you’ll learn
What you’ll learn
Key takeaways
- HR teams manage the employee data that payroll depends on, while the Finance team oversees filings and controls
- Payroll can be HR-led, finance-led, or shared, depending on your team and compliance needs
- Mapping responsibilities helps avoid mistakes and improves operational clarity
Payroll ownership depends on how your business is set up. In some businesses, HR takes care of the entire payroll process. In others, the finance department steps in for things like taxes, reconciliations, and compliance. Plenty of teams split the responsibilities. That’s why questions like “Does HR or accounting handle payroll?” pop up so often.
Without a clear internal distribution of responsibility, it’s easy for tasks to fall through the cracks. This guide breaks down common ownership models, shows how responsibilities can be shared, and explores how trusted payroll software helps teams stay aligned.
HR’s lane: The employee data that powers accurate payroll
Payroll mishaps often trace back to the inputs. This is where HR’s work really shapes the outcome of each pay run. From tax forms to benefit elections, human resource teams manage the data that determines how each paycheck is calculated.
To keep payroll accurate, HR is responsible for collecting and maintaining a wide range of employee information. Examples include W-4s, I-9s, direct deposit details, state and local forms, garnishments, and updates to pay rates or PTO balances. Whew! Delays in these updates can cause missed payments or amounts that don’t add up right. That may explain why only 52.65% of employees feel fully confident that their pay is correct every time.
To help us understand a common question that comes up often, we spoke with David Kindness, a CPA and frequent OnPay contributor.
Is payroll a part of human resources?
Payroll is a key element of the HR process, but it isn’t exclusively a part of it. Instead, payroll is its own beast, and it is typically tamed by your HR and finance departments working together to own it collaboratively.
Here’s how this often comes together.
- HR “owns” the foundational data that payroll runs on, such as employee information, hours, and deductions. This makes payroll a direct output of HR’s core people-management functions.
- Then, the execution and financial oversight of payroll belong to Finance, which handles payment distributions, tax compliance, reporting, and posting financial changes to the general ledger (GL).
- Therefore, while payroll is a key function that HR is deeply involved with, it is often a shared, cross-departmental process that relies on collaboration between both teams to optimize both accuracy and compliance.
— David Kindness CPA, and OnPay subject matter expert
HR also tracks promotions, status changes, and leaves of absence. These changes affect tax withholding, benefit eligibility, and payroll deductions. Without consistent updates, gaps form between what employees expect and what gets processed.
Accurate payroll depends on up-to-date information. HR keeps that information flowing, ensuring that every payroll run is based on current data. Once that data is in place, it’s up to Finance to handle what happens next.
Finance’s lane: Tax, accounting, and financial controls
After HR enters employee data, Finance handles tax deposits, account reconciliation, general ledger syncs, and audit prep. Mistakes in these areas can be costly.
In fiscal year 2024, the IRS issued over 4.4 million civil penalties. Most were tied to late deposits, missed filings, or worker misclassification. With deadlines spread across multiple agencies, even small mistakes can lead to big consequences.
To reduce risk, finance teams implement checks and controls. Approval workflows, change logs, and role-based access help keep payroll secure. Dual approvals make sure no step goes unchecked.
Finance also owns the accounting integrations. From mapping wage types to general ledger (GL) codes to automating payroll exports for reconciliation, this team connects payroll with financial reporting. Clean data supports clean payroll processing. When it comes down to it getting the wages into the hands of workers, once more we tapped David for his insights.
Does HR handle paychecks?
HR may handle all the details that lead up to payday, but it’s usually finance that actually moves the money. Instead, HR is mainly responsible for ensuring that the data used to calculate the paychecks is flawless. This includes:
- Submitting accurate hours worked, updated pay rates, and correct deductions for benefits or garnishments.
- Then, the physical or digital disbursement of each employee’s net pay – the actual movement of funds from the company account to employee accounts – is almost always overseen by the finance department.
- Additionally, finance manages the bank reconciliations and controls the company’s cash flow to ensure funds are available.
— David Kindness, CPA, OnPay contributor
So, while HR provides the essential inputs, finance typically executes the financial transaction, generally resulting in a shared responsibility.
Should HR be responsible for payroll?
The answer depends on your specific business. For smaller companies, HR can sometimes manage the entire process, end to end. But as your team grows, payroll gets more complex with multiple states, garnishments, or tax filings, and you’ll almost always need the finance folks involved. A hybrid approach tends to give growing companies the best of both worlds.
It allows HR to ensure employee data is accurate and timely, while the finance department manages deposits, tax compliance, accounting integrations, and audit integrity, mitigating significant risks like IRS penalties.
— CPA pro tip from David Kindness
Many small business owners begin doing the payroll on their own before shifting to a hybrid model. As your business grows, payroll gets more complicated. Splitting responsibilities helps each team do what they do best and sets you up with a system that can scale with your business needs.
Mapping payroll duties across departments
Once you’ve selected your model, it’s time to document who owns each task. Breaking payroll down into clear steps helps ensure that nothing — especially the smaller, easy-to-overlook details — slips through the cracks. It also makes ownership clear, so each person knows exactly what they’re expected to handle. A RACI (Responsible, Accountable, Consulted, and Informed) chart makes it easier to see who’s doing what and who needs to stay in the loop. Below is an example with tasks around paying employees.
| Task | HR | Finance | Payroll provider/software | Notes |
|---|---|---|---|---|
| Collect onboarding documents | ||||
| Capture and approve hours worked | ||||
| Update pay rates and deductions | ||||
| Track PTO and leave balances | ||||
| Pre-payroll review and error check | ||||
| Approve and run payroll | ||||
| Disburse net pay | ||||
| Submit payroll tax deposits | ||||
| File payroll tax returns | ||||
| Export to accounting or post to GL | ||||
| Process benefits and garnishments | ||||
| Year-end tax forms (W-2, 1099) |
Here’s how payroll typically flows:
- HR inputs → Time tracking import → Payroll calculation → QA and approvals → Net pay disbursement → Finance tax filings → GL sync and reporting
Clear role assignments help payroll run smoothly, improve communication across teams, and make it easier to catch mistakes before they cause problems.
Who should run payroll — HR or finance?
The truth is, it works best when they share the responsibility. HR focuses on the front end with accurate employee information, while Finance oversees the back end with payments, taxes, and reporting. That collaboration is what keeps payroll smooth and error-free.
— David Kindness, CPA
This builds a foundation for dependable payroll operations. With responsibilities clearly mapped out, the next step is making sure both teams have the right tools to stay aligned and efficient.
“OnPay has been a dream to use for my small business. It has completely streamlined my payroll processing and gives me one less thing to worry about each week! It only takes me 5 minutes to run payroll every two weeks, and make sure that it’s done accurately and correctly each time. I spend the extra time I have focused on my business, including training my employees to do what they do best!”
— Mohamed Aziz, F45
Beyond mere compliance, payroll accuracy helps to build employee trust and loyalty. Even a single mistake can shake confidence and lead people to question their future with the company. By helping your team catch problems early and collaborate efficiently, you can future-proof operations and your workplace culture.
HR has a role to play in payroll
Who handles payroll: HR or Finance? The truth is, it’s not either-or. If your payroll is simple, one department can run it, but as complexity grows, both sides will need to collaborate. HR ensures employee data is correct and up to date, while Finance manages the financial execution.That said, when both sides assume the other is in charge, things get messy. No matter how you decide to handle it, payroll services like OnPay keep it from getting complicated. If you have any questions, we are here to help!
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.