Payroll processing is a complex task that involves filing taxes, calculating wages, holding deductions, and delivering payments. If you are new to processing payroll for your employees it feels difficult. There are two ways of processing payroll. You can go manual process or a fully automated process depending on your requirement and cost.
Let us discuss the steps of payroll processing
What is payroll processing?
It is the major business function that involves the salary calculations after the deductions & necessary taxes.
Net pay = Gross salary + Gross deductions
Gross salary includes — Salary+Allowances+Benefits
The gross deduction includes — One-time deductions+Regular deductions
There are several rules & regulations to follow when processing payroll like labor laws, statutory compliance, and government taxes.
Choose the payroll system
If you are a small business owner you can choose the manual process payroll. But if your business gets bigger payroll processing is a time-consuming process. One can outsource the payroll processing to the best payroll processing companies for professional assistance.
Define the payroll policy
It is the basic stage of the payroll process. Prepare the payroll strategies, write down policies, and turn policies into standards after approval from the management. Policies include payment methods, attendance policy, pay dates, and leave and benefit policies. Some payroll processing companies work on framing & structuring policies for organizations.
Collection of information
Another step of payroll processing is gathering the required information from your employees in various departments to ensure accurate calculations of the payroll process. Examples of data: — Salary structure, Allowances, Income tax, attendance system, Work shifts, etc.
- Set up direct bank deposits for fast, convenient payroll management. It is the more efficient and less expensive way to pay your employees or through payment cards.
- Calculate the break periods, overtime, and pay periods, and track employee work hours for record-keeping requirements.
Validating input & payroll calculation
Once all the information is done check the accuracy of the information. Check the data is in the right format and adheres to the company policy. After collecting inputs, if the information looks accurate & verified, feed those data into the payroll system approval, and submit the payroll for employees to issue payments.
Report and update
Every organization needs to maintain records for future audits. Update your payroll records for the book of accounts. Prepare accurate department-wise reports for an efficient payroll process.
Hale human capital is an HR audit company located in Chennai providing the best payroll processing services for all organizations.
