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Assurance to compensate all the people working in a company means to have a definite payroll system for the company, managed by the human resource department, or, for SMEs, mostly by the owner or the associates. It is the system to keep track of total payables of an owner to the employers of the company.
Human resources department of any company is the most crucial part of any organization. Since the employees are the assets of the company, human resource management system is established to look out for them.
However the system processes, cloud-based or manually, it is a mandatory to have a strong payroll system to track the employee hours, understanding deductions, issue payments to the employees.
|The Net Pay = Gross Pay – (Deductions + Total TDS).|
Total TDS is the sum of TDS, Surcharge, Health & Education.
the payroll taxes= (Basic + Allowances – Deductions (ESI)) * 12 – (IT Declarations)
Payroll management is a complicated process that involves multiple departments of a company, including the HR, finance, in-charge of attendance etc. all the necessary data is collected and merged to accurately calculate the net payable to a certain employee. Once all the data is gathered, and analyzed, it is then the time for approval from the owner and pay them off.
Steps followed to process payroll are as follows:
- Onboard employees: it is the first step to onboard and enlist all the employees to be paid.
- Defining payroll policies: Defining and taking approval from the management to ensure standard execution.
- Gathering employee inputs: All input data is collected from the employees before or on their joining in the organization as these are some crucial for payroll processing
- Validating employee inputs: The inputs should be valid according to the company policy and approval models.
- Calculating payroll: Validated inputs are to be fed into the system to result into the calculation of payroll processing. This steps also includes updating the employee list and cross-checking it.
- Disburse employee salaries: Disbursing employee salaries after ensuring that the company account has sufficient amount to pay all the employees.
- Paying statutory dues: all statutory dues are paid off to the appropriate concerns.
- Distributing pay slips: Distributing pay slips to the employees with their tax computation sheet is the final step of managing payroll for an organization.
Payroll processing, as a business function, involves some constituents like-
- Structuring the organization’s pay policies.
- Ease the payment options.
- Defining basic pay slips.
- Processing and releasing employee salaries.
- Filing tax returns and depositing all the dues with appropriate authority.
Challenges come following the calculation system of payroll which is actually a complex system to follow through. Some of the challenges include:
- It is challenging for the HR manager to stay statuary compliant
- Any kind of delay caused by the dependency on inputs from multiple systems can disrupt and hamper the whole chain.
- Lack of effective data management and reporting between different teams handling inputs can disrupt the whole process.
Nucleus of a company is its human resources who work for the company. A proper payroll ensures to compensate them for all their hard tasks and maintains a stable workforce. A developed and improved payroll system helps in maintaining the usual and appropriate payments and stop them from making any delay or helps pay up the dues. To have a well maintained payroll system can as well keep a stable environment in the company.