Payroll is a list of employees that are paid by the company. Payroll is the total amount the employers pay to the employees. A payroll function involves the development of an organization pay policy that includes flexible benefits, leave encashment policy.
Payroll management also includes payslip components like basic, variable pay, HRA, and LTA. and also gathering other payroll inputs like the organization's food vendor supply, etc.
Payroll and HR management also involve releasing the employees' salary, depositing the dues like TDS, PF, etc with appropriate authorities, and filing returns.
Put together Payroll processing includes the calculation of the Net Pay after the tax adjustments and other deductions.
The first step is wherein the policies to the bank during the payroll processes need to be established. These policies need to be approved by the management to turn these policies into standards. Policies like the Pay policy, Attendance policy, leave and benefits policy, and more.
At this stage, the inputs are gathered from various departments to ensure the accurate calculation of the payroll.
|Source of Data||Data Example|
|Employees||Income tax declaration, facilities availed, and more|
|HR team||Salary structure, eligibility for benefits|
|Finance team||Deduction for recoveries|
|Leave and attendance systems||Data from attendance systems, current work shift, etc.|
|General service providers||Transport service provider, canteen vendor, etc.|
This data collection can seem tedious at first but registering with IndiaFilings will make it more hassle-free.
It is necessary to verify the validity of the data once it is gathered as a minute mistake can ruin the entire payroll process.
It is necessary to ensure that the list contains all the active employees and no records of inactive employees. Checking the data whether it adheres to the company policy. Ensure the present in the right format.
This step is when the validated input data is fed into the payroll system for actual payroll processing. The result is the Net pay after adjusting the necessary taxes and other deductions.
Once the payroll process is over it is always better to reconcile the values and verify the accuracy to avoid further errors.
The payroll administrator needs to religiously adhere to statutory compliance. There are various statutory deductions like EPF, TDS, ESI is deducted during the payroll processing.
These deductions are then paid to the respective authorities or government bodies.
Every organization is required to maintain an accurate book of accounts and the salary that is paid for one of the significant entries in the books of accounts.
After complying with the steps above the salaries can be finally paid in cash or cheque or via bank transfers. For hassle-free transfers, it is better to have salary accounts of the employees.
Preparing a report is the last stage and it is necessary to prepare an accurate report containing information such as the department or location-wise employee cost.
At the initial stage of operations and when a company has a handful of employees they opt for excel based payroll management.
In excel based payroll management the calculation is done on excel sheets using the standard payroll calculation template. The already set mathematical formulas help the payroll officer to do the computation. But this method has many errors like
When the payroll is outsourced an external agency is taking care of the payroll function. The payroll service provider based on the pay cycle every month provides various other data such as the attendance, leaves, and reimbursement details.
The external service provider then computes the payroll and takes care of the statutory compliance. Since payroll is a crucial function IndiaFilings can help you comply with all the needs.
Because of these two reasons, payroll management processing becomes difficult
Nonadherence to the statutory laws can lead to a penalty of fines and in the worst case, it will even threaten the existence of the business. However, when you register with IndiaFilings you automatically process payroll in compliance with the statutory laws.
Before the payroll is processed it is necessary to get all the data together from varied sources like the attendance register conveyance facility availed record, data from the HR team like salary revision information, etc. making it a tedious process.
For years the HR and payroll managers managed the payroll on excel sheets but excel sheets have problems like dependency on excel formulas for calculation of salary, complexity in adding and removing the employees, and other limitations like manual data entry, and difficulty in extracting information.
Last updated: Dec 15, 2021