A History Lesson: The Evolution of Payroll Processing
Payroll has grown and evolved its systems and technologies into what businesses worldwide use today. Different organisations may have their own unique systems and subscribe to a variety of payroll services, but the purpose of payroll and its textbook definition is understood to be the same: it is the total amount of wages paid by a company to its employees and other workers.
Although described in modern terms, that definition of payroll is essentially the same as what it would have been centuries ago when governments and businesses only started becoming organised. Employers would have had to pay their workers and, at some point, pay taxes to the governing power. Over time, those historical business owners would have started recording and streamlining this process.
Let’s take a look at a brief history of payroll processing to get an overview of how this process has, and always will be, an essential practice within any enterprise.
14th Century Bookkeeping
It was around the 14th and 15th century when business owners realised that bookkeeping and accounting were essential for creating a successful business. “Tracking the books” used to mean keeping meticulous records of expenses and sales. Slowly, bookkeeping meant incorporating all business finances – including keeping track of payroll, or how much they paid their employees. Tax-paying also started becoming a company responsibility as tax laws increased.
20th Century Business Payrolls
The practice continued to evolve, becoming a standalone skill separate from bookkeeping. During this time, businesses started outsourcing payroll management. However, payroll remained a manual system due to the lack of available technology until the latter end of the century.
In the late 20th century, around the 70s and 80s, the creation of automated payroll systems and payroll companies was brought about due to a couple of reasons. Firstly, human error was playing too big of a role in the process, and secondly, technology was evolving with the birth of computer science. Since then, payroll management became easier, repetitive, and scalable, revolutionising the outsourcing industry.
In 1982, the American Payroll Association was founded to provide education, support and representation for individuals responsible for processing company payrolls. The organisation helped to standardise the practice, as they became the leader in payroll education, publications and training to help increase the payroll professional’s skill levels. The New Zealand Payroll Practitioners’ Association (NZPPA) was formed in 2007 as the Kiwi equivalent of APA, helping to promote payroll as a profession in New Zealand.
It was only in the 90s when payroll outsourcing truly soared as an independent service that the industry began providing transparent payroll management, benefiting both business and employee.
21st Century Payroll Solutions
Today, payroll as we know it has become a more personalised service designed to meet unique business needs. Payroll companies now generally provide bookkeeping, administration or HR services as part of their services package to offload time-consuming administration work, freeing employees from demanding paperwork. This allows organisations to focus their attention on growing their business and maximising profits.
3rd Arm Admin also has a deep and rich history with providing professional payroll solutions for Kiwi businesses in Wellington. With over 20 years of experience in all bookkeeping and administration practices, rest assured that 3rd Arm Admin has the knowledge, experience and expertise to take care of all your administration and bookkeeping needs.
Contact us today at 04 232 9199 and talk to us about how we can help you with your business needs.
