Definitions of Payroll Related Terms

Payroll related terms are important to understand when managing payroll accounting for an organization. These terms include:

  • Salary: A regular payment made to an employee, typically on a monthly or yearly basis, for their managerial, administrative, or other skilled services.

  • Wages: Payment made to an employee, typically on an hourly or per-unit basis, for unskilled manual labor.

  • Pay period: The length of time between successive payments of salary or wages. This can be weekly, biweekly, monthly, or another interval.

  • Pay day: The day on which salary or wages are paid to employees.

  • Employee: An individual who works primarily for one organization and is under the direct supervision of their employer.

  • Self-employed person: An individual who works for themselves rather than for an employer. They are responsible for their own taxes and do not receive a salary or wages.

It is important to differentiate between employees and self-employed persons because they are treated differently for tax purposes and may have different rights and responsibilities.


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