Payroll is the process of paying a company’s employees, which includes tracking hours worked, calculating employees’ pay, and distributing payments via direct deposit to employee bank accounts or by check. However, companies must also perform accounting functions to record payroll, taxes withheld, bonuses, overtime pay, sick time, and vacation pay. Companies must put aside and record the amount to be paid to the government for Medicare, social security, and unemployment taxes. Many medium and large size companies outsource payroll services to streamline the process. Employers track the number of hours each employee works and relay this information to the payroll service. On payday, the payroll service calculates the gross amount the employee is owed based on the number of hours or weeks worked during the pay period and the pay rate. The service deducts taxes and other withholdings from earnings and then pays the employees.