Payroll

What's the essential features of payroll?

The essential features of payroll are:
1. Payroll is the term used to describe the process of paying employees.
2. Payroll is a regular (usually monthly) process by which you make timely payments to your employees.
3. Payroll is usually a legal requirement for any company with more employees paying salaries or wages to workers.
4. A payroll system helps keep track of salaries and wages and withholds appropriate amounts for tax and employment-related purposes.
5. The payroll system also maintains records of contributions made by the employer towards an employee’s pension scheme, medical insurance, and other benefits.

How is payroll handled?

Payroll is a complex activity that requires a collaborative effort from various departments of an organization. Can streamline this by setting up a proper payroll system for employees. The process involves gathering information on employee details like basic salary, tax deductions, your organization’s policies, and procedures and calculating each employee’s net pay. It is crucial to set up clear communication channels between all the parties involved in the organization’s payroll process. Can be done with the help of software that provides secure access to multiple users, enabling them to work together towards achieving goals.

How long does payroll take to pay you?

It typically takes 1-2 days to process payroll, although it can be as long as a week or ten days, depending on the number of paid employees. All input is gathered from various departments and placed in the appropriate fields. You may need to check with HR to determine how quickly you will receive your paycheck once processed.

How do you calculate your payroll?

Payroll is calculated by following simple steps:

Gross Pay = Basic Pay + Other Allowances

Deductions = Employee State Insurance + Income

Tax Net Pay = Gross Pay – Deductions + Other Taxes

Is payroll human resources or finance function?

Although payroll is part of the HR function, it has to be executed after getting all the data like coding of items, accounting codes, etc. The way you put it is a human resources function, but in reality, it is not because it needs input from other departments such as Finance, Admin, Canteen Vendor, and Transport.

What is payroll used for it?

Payroll is the system used to process and pay salaries to employees according to their HRA (House rent allowance), allowances, and deductions by income tax rules. It is a complex system, given the various laws, taxable allowances, etc. A mistake in payroll could lead to problems such as disgruntled employees, high costs in terms of salary over-payments, and non-compliance in terms of TDS (Tax deduction at source).

What are the elements of payroll?

Payroll or wages and salaries are the monetary remunerations which are paid to employees for rendering their services. It is a regular expense that any employer has to incur in order to pay the dues to their employees. The process begins with the hiring of an employee and ends with a settlement after his resignation or termination.
As a business function, payroll involves:

• Structuring the organization’s pay policy including leave encashment policy and overtimes.
• Flexi payment options, allowances, tax saving components etc.
• Defining payslip components like basic, HRA and LTA.
• Calculating the gross salary and net amount to be paid after the deductions.
• Processing and releasing employees’ salaries every month including annual bonuses if any.
• Filing tax returns and depositing dues like EPF, TDS etc. with the appropriate authority.

What steps are involved in the payroll process?

Tasks performed by payroll professionals:
1. Collect and verify employee data.
2. Prepare to withhold tax tables and calculations.
3. Calculate net pay for each employee based on their gross earnings, adjustments, deductions, and tax withholdings.
4. Create checks for each employee or an electronic file sent to a third-party payroll service provider to print checks from a remote location.
5. Distribute checks to employees via secure mail delivery or electronically.

What does full cycle payroll mean?

Full cycle payroll involves all the three stages of a payroll cycle, viz. pre-payroll, actual-payroll, and post payroll. The full cycle payroll method has proven to be the most efficient handling of the entire payroll process.

What challenges are involved in calculating payroll?

There are several challenges involved in calculating payroll. The need to stay statutory compliant otherwise, the organization may have to pay heavy fines is one of the challenges. Another challenge is the dependence on inputs from multiple systems and any delay that can disrupt the whole chain. And chances of making errors are high if it is done manually using excel sheets or by a non-expert.

Another challenge is the lack of adequate data management and reporting between different teams handling inputs like time, attendance, leaves, canteen vendors, transport vendors, etc. Annoying employee habits like delay in submitting tax-saving proofs, IT declaration, last-minute attendance regularization, etc., are also challenges for a payroll manager.

How does payroll differ from a salary?

A salary is the fixed amount of wages or remuneration an employee receives for their work regularly. Salary could be daily, weekly, monthly, or annually. Payroll is the system on which employee data is stored and used by employers to process their employees’ salaries. In short, the Payroll system is a necessary workplace function for employees to receive their salary.