All businesses, regardless of their size or industry, have one thing in common: they all need to handle employee payroll. The payroll management process though might vary from one organization to another. Therefore, it’s crucial to comprehend payroll processing and figure out the finest strategy to design a streamlined workflow for your business.
Payroll is the sum of money that a business pays in salaries and wages to its workers and employees. Additionally, it contains the data records for the employees.
Table of Contents
What is the purpose of Payroll Management?
The administration and implementation of payroll functionalities are done by an organization through the payroll management process. Managing staff financial data, such as wages and salaries, paying bonuses and incentives, deductions, and other similar information is one of these functionalities.
Moreover, it entails a constant process of auditing and updating the payroll database. Most companies have adopted technology and begun utilizing payroll administration software to keep track of employee information and handle compensation. The most sophisticated options include managing deductions, managing leaves, and tracking hours, among other payroll functions.
A crucial step in establishing financial stability and transparency is the payroll process. The seven steps outlined in this post will help you process payroll. We’ll also go through how a payroll and HR provider can assist you in automating this laborious procedure. Here is where your road to streamlined payroll begins.
Payroll Processing Stages and Components
Set the Payroll Policy in Detail
Setting up the payroll policy is the first step in the payroll process.
A payroll policy is a set of instructions and rules for how payroll processing is to be done. It describes a number of procedures, including managing employees’ salaries and/or earnings, keeping track of their time, creating payroll plans, and how an organization makes payments. The purpose of the policy is to increase openness throughout the payroll processes and to inform employees of their legal rights.
Gather and Check Inputs
After the policy has been established, the following stage is to begin gathering input from your staff. These contain the PAN numbers, residences, bank information, and other crucial facts of the personnel. Typically, all of this data is gathered during the onboarding procedure.
To ensure the legitimacy of all the documents you receive, verification is essential. You may conveniently keep all the data online in one place using HR software. It maintains order and makes the information easily accessible.
Calculating payroll
The certified inputs are fed into the payroll software at this point in the operation of payroll administration. The software accurately determines the net payment amount by automatically obtaining all the necessary data from the system. It considers a variety of factors, including the number of days worked, the commission received, mandatory deductions, and unpaid taxes.
Using payroll administration software reduces the possibility of typing or arithmetic errors and produces reliable results.
Statutory Compliance
Payroll laws and rules set forth by both the federal and state governments must be followed by every organization. When processing payroll, all statutory deductions like EPF, TDS, and ESI are taken out.
The generations of payroll and other operations must follow a set of procedures known as payroll statutory compliance. Or, to put it another way, it is the legal framework that any business must abide by while interacting with its employees. It guarantees that management treats everyone equally and fairly compensates them.
Making a Record in the Accounting System
Processing all payroll data into the accounting system comes next. Every business maintains a record of all of its financial activities.
Paid salaries and benefits are regarded as operating expenses that must be recorded in the books of account. Payroll processing is typically a module in the end-to-end accounting software used by large businesses.
A comprehensive accounting system, however, maybe a bit pricey for SMBs. They typically use two independent systems that integrate with one another because of this.
Release of Payouts
Salary reimbursement is then made to the appropriate person’s account. Your compensation can even be paid in cash or via check.
In fact, the money is immediately refunded to the accounts on the chosen date for businesses that use payroll software. Additionally, it provides an employee self-service site where the payslip may be simply published and accessed by employees.
Reports on Payroll
The top management team may request reports like the location- or department-based employee cost when payroll processing for a given month is complete. The payroll officer is in charge of delving into the data and producing reports with useful information.
Here are some top payroll solutions you can use.
Effective Payroll Management: Top Payroll Solutions
Wallet HR
Payroll software is available as a separate option with Wallet HR, an end-to-end HR solution. Payroll managers may do their duties from any location because of the availability of both on-premise and cloud versions of the software. The technology is so strong that it can complete 10,000 employees’ electronic payroll in less than 10 minutes.
Keka
One of the top payroll management systems, Keka, is poised to transform the Indian payroll sector. For whatever size of the organization, it provides a range-based wage structure that makes the automation process simpler.
Plus, Keka makes it simple to develop and review your compensation plan, giving you total control over legal compliance. The best aspect is that payslips can be distributed through email, SMS, or mobile apps, among other formats.
HRMantra
The most complex payrolls in the world may be processed using HRMantra, a payroll processing solution. The finest aspect is that you can use formulas to build an unlimited number of pay heads and figure salaries, taxes, and loans. You can generate a variety of other reports with HRMantra in addition to normal reports, such as transfer and promotion reports, salary reconciliation reports, and more.
How long does it take to process payroll?
Depending on the approach and tools they employ, firms typically spend several hours per week handling payroll. One in five small business owners claims to spend more than six hours each month managing payroll taxes internally, according to a National Small Business Association poll. Payroll taxes are viewed as the most difficult administrative obligation for small enterprises by 24% of them.
Your payroll and time tracking processes can be automated, though, if you use a payroll service. By eliminating manual duties, you may work more effectively and with less chance of breaking the law. Businesses that use payroll service solutions can cut the number of days it takes to handle payroll to just a few hours.
Conclusion
Businesses can increase productivity by automating the handling of payroll processing.
Manual payroll processing and accounting will become obsolete as automation becomes in popularity. This blog gives insight into the payroll management process. To get to know more about it, connect with SaaSworthy.
