Payroll Processing

Payroll as a term basically is the list of employees who are entitled to receive compensation from an organization. Along with the amount that each employee should receive for the time worked or tasks performed, payroll refers to a company’s financial record of payments that are made to the employees by the employer including wages, salaries, bonuses, incentives, etc.

What is Payroll Processing?

Payroll Processing refers to the complete set of steps involved in calculating the total remuneration of each employee.

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Stages to Process Payroll

Step1

Pre-Payroll Activities

  • Defining payroll policy
  • Gathering inputs
  • Input Validation

Step2

Actual Payroll Process

  • Payroll Calculation

Step3

Post-Payroll Activities

  • Statutory Compliance
  • Payroll Accounting
  • Payout
  • Reporting

1. Pre-payroll activities

To run an accurate payroll, data inputs are assembled from multiple sources in the company. Payroll is a time consuming and tedious activity due to the various compliances to be adhered to.

Understanding taxable, non-taxable and partially taxable components of the salary.
Gathering payroll data
Data requirements to run a payroll
Data validation before proceeding further

2. Payroll process

This is where real work towards reaching the net compensation of employees happens, in the way of finishing the pre-payroll activities. This is the time when accumulated payroll data (Leave & Attendance data, shift wise calculations, Tax and Deductions, Expenses, Incentives) during pre-payroll should run.

Compliance and Regulations

TDS
(Tax Deducted at Source)

What
Employers are required to deduct their employees taxes and deposit it to the government.

When
This is applicable to the very first employee if their salary exceeds the basic exemption limit

PF
(Provident Fund)

What
Contribution made towards the EPF scheme by the employees and the employers in an equal proportion.

When
applicable when total number of employees in an organization, including contractual staff , is greater than 20.(voluntary contribution for an organization with less than 20 employees is allowed)

ESI
(Employees state Insurance)

What
An amount is deducted from employees to provide insurance for medical expenses including accidents and maternity.

When
applicable when total number of employees is greater than 10.

PT
(Professional Tax)

What
Tax deducted from employees.

When
applicable to an organization from the very first employee.

3. Post-payroll activities

Post-Payroll Activities in an organization include reporting, declarations, and statements that each employer must produce for the relevant corresponding bodies. In the system, this reporting consists of reports that generate issues and downloads.

Step1

Payroll Accounting

Step2

Payout

Step3

Reporting

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