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How to Process Payroll | Payroll Process in Easy Steps
The payroll process is an essential activity in an organization with employees. Depending on the structure of the salaries and the prevailing laws and regulations, the calculation of payroll can be either simple or more complex. It is vital to process payroll in a timely and accurate manner. Any discrepancies in the calculations have a direct impact on employee morale and productivity.
The payroll process also involves compliance with the regional laws and regulations. If there are mistakes that are not in compliance with the rules, it could put the organization into legal and financial trouble. An accurate and effective payroll process is essential in any organization whether big or small. Using business management software with capabilities to manage payroll makes the entire process simpler and error-free.
The payroll is the amount of money that the employer pays out to employees for their services. Every organization has a list of add ons and deductions from the basic pay of the employee. These involve allowances, bonuses, taxes etc.What is payroll process?
To have a payroll process, every organization must:
- Define a pay policy with basic pay, benefits, leave policies, encashment of leave and other related items
- Define the components that appear on the payslip as per the company’s policy and in compliance with regulations
- Obtain and record the employee details accurately. This includes the bank account details, tax details etc.
- Validate the employee inputs
- Calculate the statutory as well as non-statutory deductions and deduct them to arrive at the gross pay amount
- Pay the salary amount to the employees through the mode that the company employs. Most often this is done by intimating the bank of the salary amount to be disbursed to each employee account
- Record the payroll transactions in the accounting system
- Pay the dues to the appropriate authorities and file returns accurately and before the due dates
- Physically or digitally (PDF) distribute payslips and other relevant tax documents to the employees.
How to process payroll in easy steps?
The payroll process steps are categorized into the following
- Pre-payroll process,
- Payroll calculation process
- Post-payroll process
Let’s discuss each of these in detail.
Pre-Payroll Process
Defining the payroll policy
Different organizations have their own unique payroll policies. These should be very clearly and unambiguously defined. The first step is to define the basic pay for the different designations in the organization. Leaves and benefits are monetized differently in each organization. There may be deductions for leave taken beyond the given quota. Unused leave may be convertible to money. Some organizations pay for overtime while others do not. Certain companies have the practice of an annual bonus payout. If the bonus is performance-based, the policy should be well defined. The accurate computation of this amount is essential. The payroll policy should be approved by the management of the organization.
Data gathering
The details of an employee are usually collected and recorded at the time of onboarding a new employee. This may include their PAN number, other ID numbers and details.
Attendance and performance data
Payroll also requires the attendance data of the employee. If any bonuses or benefits are due, the relevant department would have to provide the data to payroll. If the employee has earned a performance bonus or a raise, it should be recorded by payroll. In a smaller organization, this data would be easy to gather and compute. In a larger organization, this flow of data to payroll is more challenging. Business management software with an integrated payroll system makes the data flow easier and more accurate.
 Validation
All the data received would have to be validated for accuracy and compliance with the organization’s policies as well as the law. Payroll would have to ensure that no employee who has left employment continues to feature as an active employee for payroll calculation. All the current employees should be included for salary calculation without missing anyone.
Payroll calculation process
This is the payroll process that takes place based on the data input.Payroll is calculated manually or through the use of software to calculate the net pay after factoring in gross income and gross deductions.
Gross income/salary = regular income + allowances if any + one time payment or bonus if any
Gross deduction = regular deductions + statutory deductions + one-time deductions if any
Net pay = Gross income – gross deduction
If the payroll is calculated manually, these values are checked for accuracy and errors if any are corrected.
Post-payroll process
Payroll accounting
The amount of salary disbursed as well as the different components of additions and deductions have to be accounted for. The relevant transactions have to be recorded and entered as per the accounting practices of the organization. If the company uses a standalone payroll software or HR software the data would have to be reentered into the accounting software.
Salary payout
The actual payment of salary to the employees is most often through bank accounts. The organization’s bank account should be sufficiently funded before initiating the salary disbursal payroll process. A salary bank advice statement is generated based on the net pay for each employee along with their account number.
Reporting
Payslips and tax details are generated and given to the employees physically or digitally. Payroll reports that are required by the management have to be generated and submitted.
Compliance
The statutory deductions that are made from the employees’ salaries have to be paid to the relevant government agencies. The amounts have to be paid and the returns filed well within the due dates.
Process payroll accurately and on time every time
When there are gaps in the payroll data flow, the chance of computational or data entry errors is higher. It is essential that payroll should be error-free and in compliance with the laws and regulations. TallyPrime makes the payroll process quick and easy.
The benefits of payroll accounting with TallyPrime are:
- Integration with financial accounting. Tally seamlessly integrates the payroll amounts to the accounting process. There is no necessity for reentering all the payroll data into the accounting software
- Generates payslips for employees
- Enables payroll processing with compliance
- Also tracks the loan details of employees
- Allows flexibility in user-defined classifications, departments, groups, subgroups and other criteria. It also allows the user to define all the components of payroll such as attendance/time/production units, earning and deduction pay heads.
How to Set GST Details in TallyPrime GST Software
Generate e-Way bill Instantly Using TallyPrime
Electronic waybill, popularly known as an e-Way bill is a document that needs to be generated for consignment involving the movement of goods beyond the notified value. Most states have a threshold value of 50,000 and a higher threshold value in a few states.
e-Way bill is not a new concept. It has been in place for a few years now and in fact, even before GST with different names. We all know it is a process that requires the supplier/transporter to generate an e-way bill from the portal before transporting or shipping the goods. Once the e-way bill is generated, a unique number is generated for a specific consignment along with an e-way bill document and the supplier can choose to capture it on the invoice.
Today, most businesses generate e-way bills by mentioning the invoice details on the portal either using offline tools (JSON) or direct entry on the portal. While it is a mandatory need, but the effort and time that goes into generating the e-way bills, make the entire process of invoicing to shipping a cumbersome one. Guess, this is a common difficulty that you must have already felt irrespective of how big or small is your business.
To alleviate the difficulty in the current way of generating the e-way bill and to make the entire process simple and seamless, the latest release of TallyPrime comes with an inbuilt connected e-way bill solution that generates e-way bill instantly.
Yes, you read it right! You just need to record an invoice and the e-way bill be generated automatically.
Using TallyPrime’s online connected e-way bill solution, you can instantly generate e-way bills. All you need to do is just record an invoice in your usual way, and TallyPrime will automatically generate an e-way bill and capture the e-way bill number on the invoice.
Tally being one of the recognised ISO certified GSP (GST Suvidha Provider), TallyPrime directly integrates with the e-way portal to seamlessly generate e-way bills for you. It is so simple that you will certainly feel that generating an e-way bill is just the same as invoicing.
Online connected e-way bill features in TallyPrime
Tally’s fully connected e-way bill solution is simple, seamless with zero manual work. Take a look at some of the key features of a connected e-way bill solution.
Generate e-way bill instantly.
Given the compliance need of e-way bills in the process of invoicing and shipment, you no longer need to look at invoicing and e-way bill generation separately. Using TallyPrime, you seamlessly generate an e-way bill online by just recording the invoice. TallyPrime’s full connected solution absorbs the complexity by directly sending the details in prescribed format to the portal and fetches e-way bill details automatically.
Cancel, Extend and update e-way bill online
In some situations, the invoices for which e-way bill is already generated requires to be cancelled. It could be for various reasons such as data entry mistake/order cancelled etc. Also, in an exceptional circumstance like natural calamity, trans-shipment delay, accident, break-down etc. you may want to extend the validity of the e-way bill. No matter what situations you encounter, using TallyPrime, you can cancel, extend ad update e-way bills online without the need to manually perform these actions from the portal.
Also, for some reason, if you have generated an e-way bill either manually or using any of the available modes (outside TallyPrime), you can auto-fetch such details and capture the e-way bill number on the invoice. Thus, keeping your books up to date.
Flexibility to generate EWB online along with e-Invoice or separately.
By design, the e-invoice system (IRP) integrates with GSTN and e-way bill system. As a result, one can generate an e-invoice along with e-way bill as well. Using TallyPrime’s connected e-way bill solution, you get even more flexibility to do so. You can choose to generate an e-way bill along with an e-invoice or can separately generate only e-way bill as it suits your need.
Flexibility to generate e-way bill for a single invoice or in bulk from a report
TallyPrime’s connected e-way bill solution comes with the flexibility to generate e-way bill for a single invoice or in bulk. You can generate an e-way bill for a single invoice in the flow of recording the transaction or you can choose to generate e-way bills in bulk (for more than one invoice) from the report. Generating e-way bills, be it a single invoice or bulk is amazingly simpler and faster.
Enhanced e-way bill reports
TallyPrime’s connected e-way bill solution comes with exclusive reports for e-way bill giving you a complete view of the e-way bill transactions and their status. With the help of the report, you will stay on top of the e-way bill status (Pending/cancelled/generated) and perform various other actions such as cancel, extend, etc. as per your needs.
Supports other modes for e-way bill generation.
In case of exigency cases like unavailability of internet services on a system or due to any other reason, if you wish to use other modes of e-way bill generation such as using offline utility, a direct entry on the portal etc. TallyPrime fully supports these situations. Â Not only it supports these circumstances, but also auto-fetches details and updates the e-way bill number on the invoice. Thus, keeping your books up to date.
What’s more? The online connected e-way bill solution of TallyPrime comes with an inbuilt alert system to prevent redundancy and ensure that the latest data is shared with the portal, especially in a multi-user environment. Furthermore, the renowned and trusted ‘Prevention, Detection and correction’ capability ensure that the transactions are validated and only the correct and complete details are sent for e-way generation. This way you can prevent errors and work error-free.
Accounting and Payroll Software
Introduction
Businesses today have plenty of obstacles to overcome and plenty of tools to help them do so. Technology in particular has greatly changed the way companies operate, and currently over ninety percent of all companies use technology of some form to help with basic functions. Payroll is the most commonly used feature in software.
Companies that don’t like the thought of outsourcing will have to find another solution, and TallyPrime’s payroll is an attractive option. There are many benefits of using TallyPrime payroll solutions or HR payroll software, including some which one may not even be aware of. If the business wants to keep the HR department responsible for payroll, considering TallyPrime payroll is a great way to help them handle the tasks.
Benefits from a payroll software for accountants
- Simplicity in usage
- Accounting and payroll software do not involve installation of any expensive infrastructure equipment for its functioning
- Implementation of accounting and payroll software is as simple as logging into a secure web portal
- No disruption of work at the office while systems are set up and no downtime with accounting and payroll software
- It is simple in a way that its features can be accessed and learned by any professional with the most basic computer software and business skills
- Ensures security and reliability of data
- Accessibility – Data can be accessed from any machine (computer) at any time
What does a business need from an HR payroll software?
If a business is considering using an automated program and keeping most of the payroll functions within the office, then it should likely ensure that payroll customer service can help it deal with any issues related to the software, especially technical support.
Most HR payroll software will provide with regular reports, but good payroll customer service means being able to request any payroll related information and receive it quickly. Say, if a business needs the stats for employee salaries or attendance over the last six months, it should be able to get it through payroll customer service.
Payroll software for small business
Technically speaking, payroll software is defined as a computer program that manages a company’s payroll necessities. For small and medium businesses, we know it’s a formidable task to sit at the end of every month and pour in many hours to summing up the salary details for each employee. Often, in such companies, the owner has to perform multiple duties and it’s difficult to spare time for calculating overtimes and employees’ taxes.
And one such HR payroll software which tops the Payroll software list among other service providers for small business entities is TallyPrime. TallyPrime Accounting and payroll software is simple yet effective software that takes care of all the necessary calculations and takes care that the salaries are paid on time.
TallyPrime delivers comprehensive payroll management software with necessary payroll compliances built in it. It provides the facility from simple payslip generation up to complex allied processes which include Salary revision, loans and advances and ad-hoc payments. It also manages the salary of the employees according to statutory norms and processes.
Notable features of TallyPrime payroll software
- Full integration with accounts for simplified payroll processing and accounting
- User-defined classifications and sub-classifications for comprehensive reporting on aspects such as employees, employee groups, pay components, or departments
- Support for user-defined Earnings and Deductions Pay Heads
- Flexible and user-defined criteria for simple or complex calculations
- Unlimited grouping of Payroll Masters
- Support for user-defined production units such as attendance, production, or time-based remuneration units
- Flexible processing period for payroll
- Comprehensive reports for cost centre as well as employee-wise costing
- Predefined processes for accurate and timely salary processing, employee statutory deductions & employer statutory contributions
- Processing payments using the e-payments capability in TallyPrime
- Auto-fill facility to expedite the attendance, payroll, and employer’s contribution processes
- Accurate computation and deduction of statutory payments such as Income Tax, ESI, EPF, NPS, Professional Tax, and Gratuity
- Generate statutory forms and challans for Income Tax and EPF & ESI, as prescribed
- Facility to drill-down to the voucher level for any alteration
- Compute arrears of previous period(s)
- Track loan details of employees.
Frequently asked questions
What is payroll management?
Payroll is simply an aggregation of total amount of wages paid by the company to its employees. Companies usually hire payroll services from third parties by way of outsourcing which make the process of accounting for payroll and easy and effortless task. Management of employee payroll in a smart way is now as easy as it can get, with TallyPrime. A collection of predefined processes in TallyPrime enables error-free automation of payroll process. Further, you can view and handle exceptions effortlessly.
How to choose the best payroll management software?
To choose the best payroll management software, you must ensure that it has the following capabilities:
- Payroll Accounting & Salary Processing
- Multiple Employee Grouping
- Flexible Attendance/Production Types
- Statutory Compliance in payroll
- Easy to define and process fixed and flexible pay-outs to the employees
- Multiple Calendar type such as fixed days, as per calendar etc. to suit your requirements
- Generate Monthly Returns, Annual Forms and Statements for PF, ESI, Professional Tax and Income Tax.
How does payroll management software work?
TallyPrime offers various features that allows you to implement and process payroll. You can use the Payroll Info. menu to create different payroll masters required for computing earnings and deductions for employees.
What is payroll in TallyPrime?
The payroll feature in TallyPrime is fully integrated with accounting to streamline payroll processing. Organisations can set up and process payroll using simple and complex criteria. A collection of predefined processes in TallyPrime enable error-free automation of payroll process.
How do I enter salary in Tally payroll software?
You can add, delete or change a pay head component or its value for individual employees. To quickly enter the pay structure of each employee, define the Pay Structure for the Employee Group for an employee group using pay heads which are applicable to most employees. You can then copy and apply the same structure to each employee.