Understanding the basics of the payroll process
Understanding the basics of the payroll process is important as payroll has a direct impact on the morale of an organisation’s employees. An organisation that is prompt and accurate in delivering payroll on time can ensure the dedication of its employees. Along with timely payment, adherence to labour laws is also crucial for an organisation’s growth and functioning. Payroll is one of the most important aspects to consider as far as compliance to labour laws is concerned. This is why Enwages HR Solutions provides payroll management system in Bangalore for those businesses interested in outsourcing their payroll. Let us understand more about payroll process.
What is payroll?
Payroll includes the list of the employees of an organisation, the calculation of the salary to be paid to them, their working hours, their payslips, etc. This process of effectively distributing salaries to the employees is carried out with the help of different departments working together with a common objective. Any error during a particular step of the process can result in delays in salary payment. Here the net pay to an employee is calculated as the difference between the gross income and the gross deduction.
The stages in payroll process
Payroll calculation involves a number of steps, which are broadly divided into three stages. Some of the steps are repeatedly checked for better accuracy while some are to be performed only once. It requires careful and attentive operation from those working on it. Careful planning of the process is also necessary for proper standardization of the process. The payroll process is divided into three stages pre-payroll, actual payroll and post-payroll.
1. Pre-payroll stage
In the pre-payroll stage, first of all, the payroll policy is to be defined. This includes policies for attendance, leave, benefits and payroll. These policies are supposed to be pre-approved by the management for proper standardization. This policy is to be finalized once and hence is not a repeated process.
The second step in pre-payroll stage is the collection of
data inputs. This can be a cumbersome process for large organisations as it
involves collecting the data such as attendance, leave, loan recovery, performance, transportation
costs, salary revision, income tax details, etc. In smaller organisations this
is carried out by smaller teams. The smart payroll system at Enwages has
integrated features for taking care of this step.
The
third step in pre-payroll stage is the verification of data inputs. In this
step, it is ensured that the entire team of active employees is on the list.
The employees are segregated on the basis of their activeness. This helps in
ensuring the accuracy of the system.
2. Actual payroll stage
The actual payroll process begins after the collection and verification of data inputs. The data from the previous stage is taken and the net pay is calculated after all tax adjustments. The value is checked for any subsequent errors.
3. Post payroll stage
This stage involves statutory deductions such as EPF, TDS and ESI, payroll accounting through ERP system, payout to employees through employee salary accounts, and final reporting to higher management.
There are some challenges to the payroll process such as the need to stay compliant with statutory regulations and dependence on multiple data input sources. The different payroll companies in Bangalore such as Enwages HR Solutions deal with all these challenges and provide payroll services to businesses of different sizes and scales. You can learn more about the benefits of payroll management system of Enwages HR Solutions here.
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