Running a business involves running with employees that help the business to keep running. Although the sentence is twisted, the point it makes still remains. Any business involves a number of processes, people, transactions, communications and outcomes working altogether in synchrony. The employees are what make it happen. A key element in maintaining employee morals and productivity at peak is ensuring and delivering timely and fair salaries. Payroll process management is what makes it happen.
Payroll is a key element in any business with more than one employee. Payroll is used in both terms, as a list of employees paid by the company as well as the total amount of money that an employer pays to the employees. Payroll process is built by careful and strategic planning. The stages in processing payroll are categorized broadly into three stages, pre- payroll stage, actual payroll stage, and post-payroll stage.
The pre-payroll process, firstly, involves defining a payroll policy. The net amount that is payed to an employee is affected by a number of factors such as pay policy, leave and benefit policy, attendance policy, etc. These factors have to be defined and approved by the management in order to build a payroll policy. Secondly, gathering inputs from various departments of a company. Departments such as human resources, finance, attendance management, etc contribute to the net take home salary of an individual. Thirdly, the input received from the various departments needs to be screened for validity and accuracy. This ensures that no employee is left out from the payroll process and no extra employee is added to it.
The actual payroll process involves consolidating all the data gathered and aligning it with dues to be deducted in form of taxes to be paid to the government and other numerous other calculations. The outcome is what we know as net salary of an employee. The post-payroll process, firstly, statuary payments such as EPF, TDS, ESI are deducted and the due amount is remitted to the respective government agencies (mainly in form of challans) and returns are filled. Secondly, all transactions made are accounted for. All data is kept in record of the company with utmost accuracy. Thirdly, the pay-out of salaries to the employees by cash, cheque, or bank transfer is settled. Fourthly, reporting any required data to higher management. Lastly, ensuring statutory compliance according to Indian Law. This means ensuring that the payments are handed out in line with applicable employment norms as defined by the state and central legislation at the time.
As it sounds, payroll process management is not a one-person job. In smaller start-up’s, it is usually done on Excel sheets using automated calculation templates. However, a business outgrows this process as it grows in size. Another method to payroll process management are software’s designed to do so. Payroll management software’s reduce the effort of manual labour. They automate payroll as well as leave and attendance management. A third method is outsourcing payroll management. Outsourcing payroll management involves hiring an external agency to handle the payroll process. The company feeds them with data of their employees and their defined payroll policies and the outsourced team takes care of the remaining process.
In conclusion, payroll process management involves accurate and experienced eyes. It forms a crucial part of hiring and maintaining employees. It is also the heaviest pay-out of the employer every month. Thus, it is of utmost importance that any business complies with the applicable laws in order to minimize the payable fines and any other charges legally applicable to the company as a failure to do so.