Pay Roll

How to Process Payroll | Payroll Process in Easy Steps

Posted on by Tally Academy

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.

Autogenerated Payroll Voucher in TallyPrime

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.

auto-generated-payroll-processing

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.

Accounting and Payroll Software

Posted on by Tally Academy

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.