Key Takeaways:

         ► Payroll is the compensation a business must pay to its employees for a set period and on a given date.

         ► The payroll process can include tracking hours worked for employees, calculating pay, and distributing payments via direct deposit or check.

         ► Companies can use professional services and outsource their payroll or use cloud-based software if they do not want to do it themselves.

         ► Calculating payroll involves many components and can be complex.

         ► However, companies must also perform accounting, record-keeping, and set aside funds for Medicare, Social Security, and unemployment taxes.

Benefits:

An effective payroll process involves a robust payroll system, compliance with payroll laws and labour laws as well. Some of the reasons why a business needs a complete Payroll Management in place are:

Easy Tax Filing and Reports:

Under the Income Tax Act, every salaried individual is liable to pay taxes as prescribed by the State and Central governments depending on the salary and exemption limit. A payroll software regularizes and avoids any mismanagement of taxes that could leave workers paying penalties. It takes care of all the compliance and statutory requirements which benefit the company in filing the taxes easily.

Determine Compensation:

As every individual’s compensation, including salary, incentives, bonuses are built into the payroll system, it becomes simpler for companies to evaluate the employee’s performance during their time of appraisal cycle.

Economical and Time-Saving:

Usually, payroll software are designed to integrate with the existing accounting system, and hence organizations can save time and money on calculating large amounts of data. Also, some advanced versions have the provision to forecast and plan budgets that companies spend on each employee.

Maintain Reputation:

In addition to fulfilling its financial obligations, a company must also ensure to maintain adherence to all the country’s tax obligations and labour compliances like TDS, ITR, ESI, PF, etc. This enhances an organization’s reputation as a stable employer and also helps in increasing the brand proposition.

Various payroll processing methods: 

Spreadsheets

Many businesses at their initial stage of operations find spreadsheet-based payroll management convenient because they only have a handful of employees to manage. 

This method involves calculations using standard templates, that have set mathematical formulas for the salary and compliance payment computations. 

While this is a cost-effective method, it’s not suitable for businesses when their employee count increases. Also, the opportunity cost of using a traditional system over automated methods is very high. 

Outsourcing 

Payroll outsourcing means entrusting your payroll execution to an agency. A lot of businesses that don’t have dedicated personnel opt for outsourcing. 

Based on their payroll cycle, they provide the agency with salary information and other data such as attendance, leaves, reimbursement details, etc. every month. The agency then calculates dues and is also responsible for complying with statutory compliances. 

Automation 

Automated payroll software will do away with all the challenges of using spreadsheets or outsourcing it. There are many payroll automation tools and software available in the market which can reduce manual efforts and increase efficiency. 

How Payroll management done?

Designing CTC Structure

Labour Compliance

Tax Planning for Employees

TDS Deduction and TDS Compliance

Setting Up of Reimbursement

Drafting Employment Agreement

Drafting HR Policy

Drafting Leave Policy

Planning Increments and Appraisals For Employees

 

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