Becoming a payroll accountant

HomeAccountingPayroll accountant

What does a payroll accountant do? 

Are you considering a career as a payroll accountant? It’s a rewarding job with a significant amount of responsibility. In this role, you can ensure that workers get paid on time and receive the correct amount. Payroll accountants: 

  • Calculate salaries, benefits, overtime, and deductions 
  • Prepare tax reports 
  • Update the payroll system to include new hires and remove workers who leave the company 
  • Input changes in salaries, benefits, or deductions 
  • Ensure adherence to federal, state, and local tax laws 
  • Provide records for audits 
  • Collaborate with other departments 
  • Reconcile payroll accounts and deduction reports 
  • Communicate with the U.S. Treasury about 401k and pension funding 

Higher-level payroll accountants may perform some tasks that typically belong to an internal auditor. 

Where do payroll accountants work? 

Payroll accountants can work for any entity that processes wages. These may include: 

  • Businesses of varying sizes 
  • Nonprofits 
  • Healthcare services 
  • Educational institutions 
  • Government offices at the federal, state, or local level 
  • Payroll administration companies that serve multiple organizations 

Skills required 

Payroll accountants should possess strong analytical and problem-solving skills. Attention to detail is critical, too. They must be highly organized to successfully work with financial documents and data. The position also requires math and computer proficiency. Payroll accountants have to meet deadlines to ensure that workers receive payments on time. 

A professional in this field must understand payroll processes. Knowledge of tax law and retirement planning is crucial. It’s also essential to have proficiency in payroll systems. Here are some of the most-used platforms that you may work with: 

Gusto

QuickBooks Payroll

Paychex Flex

OnPay 

Workful

Payroll4Free 

ADP

Rippling

UltiPro 

How to become a payroll accountant 

Payroll accountants typically need to have a bachelor’s degree in accounting. Some entry-level positions may be available to candidates with just an associate degree. Similar positions of lesser responsibility may only require a high school education with some college coursework or payroll experience. 

Earning an associate’s degree  

When you apply to an associate’s program in accounting, you’ll need to show that you completed high school or have a GED. A minimum GPA of 2.0 is typically necessary. Candidates may also have to submit ACT or SAT scores. Some schools require proficiency in specific high school math skills, such as algebra. 

Full-time students typically complete an associate’s degree in 2 years. You may be able to find 1-year accelerated programs. If you need more flexibility due to work or family responsibilities, you can study part-time or online. 

An associate’s of accounting program typically teaches: 

  • The generally accepted accounting practices (GAAP) necessary for processing, reporting, and making decisions about financial data 
  • How to prepare financial statements and manage records 
  • Detail and precision in account management and tax filing 
  • Introduction to business law  
  • Ethics in accounting 

If you want to become a Certified Public Accountant (CPA), an associate degree alone will not qualify you. However, it is one essential step toward achieving this status. 

Positions that require an associate’s degree or less 

Education requirements vary from one employer to another. At some organizations, you can qualify for the following positions with a high school diploma and related experience. Others require some college coursework or completion of an associate’s degree.  

Payroll assistants work alongside accountants to distribute employee’ payments. They typically: 

  • Collect and organize employee information 
  • Use payroll software to enter data  
  • Calculate hours, payments, tax withholding, and bonuses 
  • Issue statements and invoices 
  • Set up payments 
  • Communicate with employees and resolve payroll discrepancies 
  • Compute unemployment payments 
  • Track vacation time or sick leave 

Payroll assistants earn an annual average salary of $44,383. 

A payroll specialist performs duties similar to those of a payroll assistant. Their focus is on employee payments, and they: 

  • Compute hourly wages, salaries, and commissions 
  • Prepare and execute pay orders 
  • Gather information about the hours that employees worked 
  • Distribute paychecks and pay statements 
  • Meet with employees and management  
  • Process payroll taxes  
  • Prepare reports for the finance department 

Payroll specialists earn an average annual salary of $49,867. 

Payroll clerks also help ensure that employees receive the correct payment on time. They often: 

  • Collect and organize time cards 
  • Enter the hours employees worked, using a payroll system 
  • Check payroll data for accuracy of hourly wages, salaries, overtime, vacation days, sick leave 
  • Obtain or verify authorized signatures from managers or supervisors 
  • Respond to employee payroll-related questions and make necessary adjustments  
  • Prepare Excel spreadsheets 

The 2021 average yearly salary for a payroll clerk is $39,321. 

This position typically requires an associate’s degree. Some companies also have a professional certification prerequisite. Payroll administrators duties include; 

  • Ensure that all employees receive payment in an accurate and timely manner  
  • Work with other personnel, including those from accounting and human resources 
  • Know company policies 
  • Keep up with accounting and tax laws 
  • Prepare, process, and distribute employee paychecks 
  • File deduction reports 
  • Update company payroll procedures 

The 2021 average salary for a payroll administrator is $51,120 per year. 

To enter this role, a professional typically needs experience in similar positions. An associate’s or bachelor’s degree may be necessary, depending on company policy. Payroll managers: 

  • Oversee payroll processes 
  • Check timesheets and the accuracy of pay calculations 
  • Make sure documents are processed on time 
  • Answer questions about payroll  
  • Work with little supervision 
  • Maintain awareness of federal and state tax regulations 
  • Communicate and cooperate with other staff members 

The average annual salary for payroll managers in 2021 is $68,970.  

Earning a bachelor’s degree  

For admission to an undergraduate accounting program, you’ll need a high school diploma or equivalent. Most universities require a transcript, a 2.5 or higher GPA, and ACT or SAT scores. Some colleges may also request a personal statement or academic references. 

A bachelor’s degree in accounting typically takes 4 years to complete if you study full time. The program usually consists of about 120 credit hours of coursework. You’ll explore topics like: 

  • Financial and managerial accounting 
  • Federal taxation 
  • Profit planning and control 
  • Accounting for healthcare institutions and nonprofits 
  • Auditing 
  • Analysis of financial statements 

Positions that require a bachelor’s degree 

Professionals with a bachelor’s degree hold positions of greater responsibility. For example, the following careers are available: ults. In this strategic process, people collect, compile, and use various information essential to plan, control, and analyze their company’s future financial decisions.  

These professionals create, maintain, and interpret financial statements and corporate reports. They may work independently or with other team members. Some organizations require a candidate to hold certified public accountant (CPA) status. Others offer training to help employees obtain this credential. High-level positions typically require at least 5 years of related experience. 

The average yearly salary in 2021 for this position is $55,719.

Payroll directors supervise all aspects of the payroll process. They typically need to have extensive experience in similar positions before taking on this role. Professional certification may also be necessary. They often oversee other employees. Payroll directors also: 

  • Perform payroll audits to ensure that organizational and legal standards are met 
  • Evaluate, improve, and automate payroll processes 
  • Upgrade software 
  • Correct payroll problems 
  • Maintain documents 
  • Prepare complete and concise reports 
  • Coordinate with other departments 
  • Participate in the hiring process 

Yearly compensation for a payroll director averages $97,602. 

Senior payroll managers usually supervise compensation and benefits programs. These can include administering worker payments, 401k and savings accounts, and life and health insurance. 

Significant prior experience is necessary for this position. Senior payroll managers often must: 

  • Show leadership skills and communicate well with others 
  • Work with other senior managers to develop and update company policies 
  • Stay up-to-date with state and federal regulations regarding compensation and tax withholding 
  • Ensure that the team keeps electronic and hard copies of relevant documents as required by law and company guidelines 
  • Help update the employee manual 
  • Attend seminars and visit branch offices 

Annual compensation for a senior payroll manager in 2021 averages $91,209. 

Earning a master’s degree 

A master’s degree is not a prerequisite for most payroll accounting positions. However, it can help you qualify for management positions, giving you an edge over the competition. 

To get into a master’s program in accounting, you typically need: 

  • A bachelor’s degree in accounting or a related field 
  • Undergraduate transcripts showing a minimum GPA of 2.75 
  • A resume 
  • Recommendations 
  • A personal statement 
  • Work experience 

Some schools also require GMAT or GRE scores. The admissions process may also include an interview or essay. 

Full-time students typically complete a master’s degree in accounting within 2 years. Coursework may cover topics like: 

  • Auditing theory 
  • Advanced financial accounting 
  • Taxation of business entities 
  • Accounting ethics 

Organizations often favor candidates with a master’s degree when hiring for positions like the following: 

Financial managers are responsible for guiding an organization toward its long-term financial goals. They prepare financial reports, monitor investment activities, and lead planning. Duties also include: 

  • Ensuring the company meets legal requirements 
  • Supervising employees in the finance and accounting sectors 
  • Finding ways to reduce costs 
  • Helping management make financial decisions 

The 2021 average salary for this position is $92,633 per year. 

Controllers direct a company’s accounting functions. They manage a division or unit and provide leadership in all aspects of the department’s tasks. Corporate controllers help establish and maintain policies and procedures related to finance and accounting. They typically report to the Chief Financial Officer (CFO). 

The average yearly salary in 2021  for a corporate controller is $100,077. 

Earning a doctoral degree

Students who wish to earn a doctorate in accounting typically need to submit GRE or GMAT scores at the time of application. Some universities require an academic background in accounting or a related field. Others may allow students to complete these prerequisites as a part of the degree program. Candidates should have strong writing skills.  

A doctoral degree typically involves 70-120 credit hours. These may come from classes, research, internships, and other hands-on learning. Coursework usually includes the following topics: 

  • Business and accounting – reporting, forensic accounting, theory, and practice 
  • Statistics and economics – probability, global economics, theory, and applications 
  • Research methods – behavioral, financial, qualitative, and quantitative 

Students may choose from concentrations in the following areas: 

  • Public accounting – tax preparation and government positions 
  • Forensic accounting – law and methods for discovering fraud 
  • Accounting information systems – in-depth study of theories and tools for accounting 
  • Audit accounting – detailed evaluation of financial documents 
  • Managerial accounting – decision-making, strategies, and reporting to prepare for leadership positions 

Accountants with a doctoral degree qualify for the following positions: 

Accounting professors work in colleges or universities and instruct the next generation of accountants. Their duties may include research in addition to teaching. 

The 2021 average annual salary for this position is $77,419. 

Top executives are responsible for the leadership of a company. In large organizations, they focus mostly on planning and policy development. In smaller settings, they may also be involved with daily operations, hiring, and training. A doctoral degree may not be required for this position, but it can set candidates apart in large companies. 

The average salary for senior manager accountant, or top executives, is $122,250. 

Accreditation 

Educational programs and institutions go through an accreditation process to certify their quality. The following agencies are responsible for accrediting U.S. colleges and programs in accounting and business: 

Before enrolling in any degree program, make sure it holds accreditation from one of the above agencies. In this way, you can be confident that the degree will be recognized nationally and qualify you for professional certification.  

Online

You can find many accounting programs in an online format. Some courses are exclusively internet-based. Others are hybrid, meaning that they combine online and in-person elements. Both options allow students greater flexibility than on-campus learning. They’re excellent for scholars who have to juggle family and work responsibilities while studying. Online programs may be cheaper, too. Special care is necessary to verify accreditation before enrolling. 

Costs and financial aid 

The yearly cost of an associate or bachelor’s degree can vary significantly from one program to another. The Trends in College Pricing and Student Aid report documents average annual undergraduate tuition and fees. The numbers range from $10,560 at in-state public schools to $37,650 at private nonprofit institutions. Annual graduate tuition and fees also vary significantly, with the following averages, according to the same source: 

  • Master’s coursework at a public university: $8,950 
  • Master’s degree at a private institution: $29,670 
  • Doctoral program at a public college: $11,440 
  • Doctoral coursework at a private university: $44,910 

During the application process, check with your college’s financial aid office regarding opportunities for grants, scholarships, and loans. By filling out the Free Application for Federal Student Aid (FAFSA), you can discover whether you qualify for government assistance. Two examples are the Pell Grant and the Federal Work-Study (FWS) program. Graduate financial aid may also include fellowships.

Professional certifications for payroll accountants

There are a few certification possibilities for payroll professionals. They include: 

Fundamental Payroll Certification (FPC) 

Payroll professionals can obtain this credential to demonstrate a baseline of competency in the field. This involves passing an exam administered by the American Payroll Association (APA). 

Certified Payroll Professional (CPP) 

To obtain this certification, a candidate must show work experience in the payroll field. They also need to take courses offered by the APA and pass a test. To begin this process, the professional must first earn the FPC credential. 

Certified Public Accountant (CPA) 

This designation, awarded by the American Institute of Certified Public Accountants (AICPA), is the most important for a public accountant. To obtain this credential, a candidate typically needs to hold a bachelor’s degree in accounting plus a total of 150 credit hours of coursework. A professional must also pass an exam to become a CPA. 

If you’d like more information about becoming a payroll accountant, you can search online. The following sites provide an excellent start.

American Payroll Association (APA)  

This organization offers two different certification tracks. It provides courses to prepare for certification exams. You can also find news and resources on the site. 

American Institute of Certified Public Accountants (AICPA) 

The AICPA offers the CPA credential along with several others for specific accounting fields. It also provides study resources and accounting-related news. 

American Accounting Association (AAA) 

The AAA aims to cultivate collaboration and innovation among accounting professionals. It offers research and publications as well as a career center where job seekers and employers can connect.