What is payroll processing?
Payroll refers to the total amount of money paid by the employer to its employees in each period. It consists of the list of the total number of employees and their work-related information like tracking of working hours, deduction of money made by the employer for employee benefits, additional benefits given, and remitting payroll taxes. While ensuring timely and accurate payment of salary you have to be very careful about various laws and regulations that are applicable such as PF (Provident Fund), labor laws, TDS (Tax Deduction at source), etc. As non-compliance with the provisions of these regulations will lead to serious legal and financial consequences. In short, the payroll process means paying employees after adjusting necessary taxes and other deductions and providing their paycheque accurately and timely.
What should be kept in mind while designing the payroll process?
In designing an organization’s pay policy includes the following aspect
- Calculate the time he devoted to work, which means total hours worked including doing a separate calculation for the overtime done by the employee so that they can be paid according to the policy of the company for overtime. Check it from the attendance report generated from your attendance system you follow like registers, bio-metric, or any other app or system-based system. Calculate and make a table of total days and hours of working.
- Now calculate the total amount of payment after calculation of total days and hours of work. Total pay components like basic, variable pay, HRA, DA, overtime pay, and other allowances have to be calculated separately and make a separate sheet.
- Gathering the information of their savings, investments, their liability like loans, etc. so they can claim the appropriate deduction and you have all the relevant documents obtained from employees to support the same.
- The calculation of gross salary, statutory as well as non-statutory deductions, to get to the net salary payable to an employee in short what he gets in hand.
- Releasing employee’s salaries on time with accurate pay.
- Depositing dues to the authorities on a timely basis like TDS, PF, etc. and filing of returns. It also helps them to claim their deduction while filing their Income-tax return in the respective assessment year.
Modes you can choose for payroll processing:
The mode of payroll processing can depend on the size of the organization, their HR (Human Resource) policies or there may be some other reasons. The mode for payroll processing is as follows:
- Excel: Using a spreadsheet for calculation and preparation of payroll is very easy and convenient. Using Excel as a spreadsheet tool is very useful for performing all the required functions, it provides you the vast range of functions that you can perform. This is used by the organization that is not working on a massive scale. As in huge companies, it is not a feasible way to work through excel.
- Payroll software: Using payroll software is very helpful for an organization. It is used by the companies that perform this process on their premises. This software provides you the flexibility so that you can get the results you need for your organization. This software usually comes with easy operating where you have to feed input and you can get your desired output. They also provide you time to time updation in software so that all recent changes in laws and amendments will also incorporate them.
- Outsourcing: This is used by those organizations that only want to focus on their core business and the strength company has meant core competency. Such an organization outsources their work to those who are dealing with such services very efficiently. Such an outsourcing company has its professional team of experts who are dedicated to that specific thing. So it is a very wise decision to opt for this service so that you can get your work done by those persons who have the expertise and hold expertise in their area.