As a professional HR manager, it’s your prime responsibility to ensure that everyone is correctly paid and on time. Since a single mistake can easily put trust of employees as well as organization status at risk. For this reason, payroll processing is an imperative task that should be done in a correct manner.
Not only large businesses, but payroll processing for small business is vital too. The steps that are incorporated in payroll processing are collecting employee time data for selected time, handling benefits as well as deductions, distributing pay of employee for that time.
Now, the main question here is what actually is payroll processing! It refers to the chore of handling payment of salary by an organization to its employees.
What Payroll Processing Encompass?
Below given are tasks that payroll administers have to achieve during payroll processing.
- Develop companies pay policy that incorporates flexible profits, leaves encashment policy etc.
- Define components of payslip- basic as well as variable pay, LTA, and so on
- Assemble more payroll inputs from transport service provider/canteen vendor
- Decide on net pay by simply calculating gross salary as well as deducting statutory as well as non-statutory sums
- Lastly, releasing employee salary
- File returns as well as deposit dues like TDS, PF, etc.
Steps to Payroll Processing
Below given are steps to payroll processing. Let’s have a look at them!
Choosing a payroll schedule: There are mainly 3 payroll schedules i.e. weekly, monthly, fortnightly. Payroll schedule actually determines how frequently you pay to your employees. The payroll schedule must suit the needs of your business in every way.
Logging employee information: This step, no doubt, is vital for correct payroll. Every information that is related to your employee wages needs to be recorded correctly. The records of payroll incorporate hours worked base salary amount, overtime amount, IR numbers, timesheet records, tax code, DOB, bank account numbers etc.
Calculate gross amount: The gross amount of employee needs to be based on the employee’s salary or simply hourly rate. This amount, no doubt, may differ during every payroll schedule because of certain factors like overtime, sick days, bonuses, commission and so on. Ensure everything is correct so that your employees can receive accurate compensation amount for their work.
Determine payroll deductions: After the calculation of employee gross pay, determine the deductions.
Create a payslip and distribute: All information about employee’s remunerations as well as deductions need to be presented clearly on payslip. Also, it should be given to the employees by maintaining proper confidentiality. After that, you must transfer funds to the bank account of employees.
Automation of Payroll Processing
Manual processing, no doubt, can be cumbersome, time taking, error-prone since you have to work with data manually by making use of paper or Microsoft Excel software. Automating the payroll processing can help you in collecting data as well as processing them automatically through computerized system.
Payroll processing automation can reduce time as well as energy that you might have to devote on making a pay check. This, in turn, will reduce burden as well as peril of payroll mistakes with pricey financial penalties. Utilizing online paystub can eliminate such mess and will make it a lot easier for employees to keep track of their payroll information.
Automated Payroll Processing Advantages
Below given are some advantages of automated payroll processing that you can check:
Saves cost: Once functions of payroll like calculating pays, working out tax payments and so on gets automated, you will not require many payroll clerks. Why? Since one person will be able to handle the software easily which, in turn, will save organization money only.
Saves time: Payroll software another feature is that it has the capability to calculate compensation of employees in small period. Payroll software simply speeds up the entire procedure of pay calculation as well as doesn’t need much human involvement.
Eliminates error: There’s a possibility that a person may lose concentration while dealing with much data in case of manual process. Payroll systems can eliminate such human errors and guarantees that all payments are done correctly.
Hope you have enjoyed reading this guide and it helped you in knowing all about the payroll processing. If you are running a business, then you can understand the importance of payroll processing for guaranteeing everything runs efficiently.
“Happy employees only make a productive and flourishing workspace”. It doesn’t matter whether you are running a small or a large business, keeping employees happy with smooth payroll process must be your topmost priority.