Employee Satisfaction: Accurate and timely payroll is essential for maintaining employee trust and satisfaction. If employees are paid correctly and on time, it improves morale and reduces turnover.

Compliance: Payroll must comply with local, state, and national tax laws, including income tax, social security contributions, and other mandatory withholdings (e.g., Provident Fund, Employee State Insurance (ESI) in India).

Financial Management: Payroll is one of the biggest expenses for most businesses. Proper payroll management helps in budgeting and financial planning.

Legal Compliance: Ensures adherence to labor laws, tax regulations, and employment contracts. Failure to comply with payroll laws can lead to legal fines, penalties, or lawsuits.