Payroll for your business – Process, Features & Benefits
What is Payroll ?
Payroll is a process by which the employer pays his employees. The payroll processing consists of calculations on employee’s earnings and deduction on the monthly basis. There are several factors involved such as basic salary, allowances, bonus, medical benefits, gratuity and pf deductions. Since accuracy is most important for salary calculations, all these can’t be handled manually but with payroll software.
Processes involved in Payroll :
The standard processes involved in payroll processes can be divided into three categories like pre payroll activities, payroll calculations and post payroll process. Let us dive deep into what activities are involved in each process.
Defining payroll policy :
The first stage is to establish the standard set of HR policies to the company approved by the management. Example – pay policy, salary calculations, leave & attendance policy and other benefits.
Gather inputs :
The next step will be to collect all those information such as employee’s tax declarations, salary structure, deductions, data from attendance machines, work shift and other details like transport service, canteen etc
Validation of Input :
Once the information is collected, you need to verify that it’s valid and accurate with respect to each and every employee. Even a small mistake would lead to error in the complete payroll process. Also assure that data adheres to the defined policies and presented in the right format.
Payroll calculation :
Once the data has been verified, next you need to feed into the payroll system. All the above mentioned activities need accuracy to be maintained and cannot be done manually. Hence an automated and advanced software for payroll is necessary for any company. Even though the company might have a few employees, for a growing company a payroll software serves a healthy relationship leading to good employee management. So in this step, you will finally have the net pay calculations done after adjusting the tax and pf deductions.
Statutory compliance :
Statutory compliance is nothing but the legal framework within which any organization must function that ensures the welfare of employee, employer and organization as well. Deductions like EPF, TDS and ESI are to be paid to the respective authorities or government bodies.
Finally after all these steps, you can pay the salaries to the employees through cheque or bank transfers. For hassle free transfers it is preferable to have salary accounts. The employee details like employee ID, account number and net pay should be sent to the branch.
How Payroll software helps your business ?
Saves time : Payroll processing is a time consuming process as it needs accuracy as well as handling large databases. All those above listed activities can be automated using a good payroll software, hence saving time.
Confidentiality : Confidentiality is a major factor to be maintained with payroll processes. Leakage of employee salary can cause severe repercussions. As the employee details must be kept secured and safe, a payroll software can help with enhanced security.
Better accuracy : Nothing is worse than a mistake in the payroll system. Making an error in the salary structure or payment could destroy the company’s morale and even lead to legal problems for your firm. Thus payroll software serves as a great help in maintaining data accuracy and warning any miscalculations.
Maintain compliance : As already said statutory compliances such as tax declarations and PF deductions are something that should be done regularly and without any errors. Any such mistakes would land your company into big trouble such as hefty fines and penalties. But payroll software ensures you align with all those compliances.
Data security : The employee payroll details include personal data like birth dates, address and other identity proofs that need to be protected. The payroll software ensures higher security and prevents it from falling into the wrong hands.
Tax calculations : Payroll software calculates tax deductions with accuracy and can be automated for future processes on a regular basis.
What are the features that should be expected from a good payroll software ?
Statutory compliance :
No matter which country your business presence is in, payroll software should help you comply with all legal norms. The tool should support generating reports and statements for PF, Tax, Employee insurance and other standards as per the country norms.
Employee self service :
Employee self service is nothing but an access given to the employees to view HR policies & pay slips, choose income tax structures and make tax declarations.
Bank transfer :
With the help of bank transfer features the salary can be easily processed by automating transfer statements in the format required by the banks.
User-defined salary structures :
The software should be flexible enough to configure payroll in different payroll structures for different groups of employees in your company.
Integration with attendance devices :
Attendance data like employee in/out timings are important in any late calculations for payroll processing. Hence the payroll tool should automate the attendance data for further processing.
Customizable pay slips :
Customizing pay slip option enables you to add additional information such as overtime, lateness, leave days, leave balance etc. This would avoid unnecessary confusions and will be greatly appreciated by employees.
Loans, Advance and Bonus :
A loan issued to an employee should be recovered in installments, the salary paid in advance should reflect in the pay slip, and so on. To accommodate these your payroll software should also have additional features like Loans & Advance Management, Bonus, Gratuity, Arrears, Welfare Fund, and so on.
Final Settlement :
Final settlement is a compensation given to an employee when he/she leaves the organization. This calculation is done using various factors like total years of service, unused leave balances, bonus, gratuity etc. Hence it is just more than a payroll processing.
Minimal manual intervention :
The salary is processed with various real time data recorded during the pay period and this data is automatically used by the software. Hence it should not pave way for many manual intervention leading to duplicate data.
Less error and low processing time :
As discussed above, a payroll process involves huge data and information to be processed for each and every employee. Another challenge is that this should be done only after the pay period and hence there is only minimal time left before crediting the salary. An efficient software tool eases and automates all these processes saving more time and less error.
Freedom ERP is a manufacturing ERP software for small businesses. Our Software has all the above mentioned payroll features which greatly helps your employee management. For more details contact us for a free demo.