Purpose, Objective & Stages Of Payroll

Purpose, Objective & Stages Of Payroll

Purpose of Payroll

When you first started your business, you had this great idea in mind, or you just had the will to have something of your own. Hence, you picked the best industry you know in and started.

The first and second month was great. You got a few clients, and you were happy to cater to their needs through freelancers. However, eventually, your work grew, you started getting more and more work, so much so that your freelancing team was not enough.

Just like that, all of a sudden, you had to face the responsibility of hiring employees, managing them, offering them hike, providing them incentives, etc.

This seemed like an easy task at first, but with time, it started getting more and more complicated. You were trapped in between multiple responsibilities – dispatching salaries on time and taking business decisions. At the end of every month, you had to stay in the office till 10 or 11 PM to complete payroll.

The primary purpose of a payroll department of any company is to ensure that their employees receive their salaries on time with the correct deductions and necessary withholdings. The said department also has the responsibility of remitting any of the withholdings or deductions of employees. This is basically done to develop and maintain good and healthy employee relations and to promote the growth of the company.



Objective of the Payroll
The payroll management system is a set of processes that helps you streamline salaries, bonuses, deductions, taxes, and other necessary aspects of the net pay of all the employees in your organization.

There are two primary objectives of the payroll management system in India. One is the macro objective, which is related to sales, strategy, revenue, etc. Another is micro, which is associated with the daily tasks of the business.

The aim behind having a payroll management system is to automate and streamline micro tasks such that the HR team has time to focus on the macro tasks.

You don’t have to worry about handling, managing, and creating payslips, salaries, and deductions of the employees. The tax deductions are also automated or handled by the outsourcing team. You only have to focus on major tasks such as the efficiency of sales, revenue, strategy, etc. 



Stages of Payroll India

1) Gather Information
To process payroll india of the employees of the organization, collect data. You need to know the time every employee has worked for, including full-day, half-day, paid leaves, short-leaves, etc. You can also capture this data directly from the biometric payroll management system.

If you are not using an automated system for payroll, you may have to spend some time collecting this data from manual sheets. 

If the data is manually captured, it is necessary to thoroughly verify the data to understand if everything is up to the mark. For example, you may have accidentally placed the leave of an employee in someone else’s column in the Excel sheet. So, you are required to cross-verify every entry with the leave applications, etc.

This is a hassle, which is why outsourced payroll management in India can be utilized. 


2) Calculate
Now, this task also depends on the help you have. If you are using an automated payroll calculation system, then you can feed the above data to the system. But, if you have to calculate payroll manually, you need to spend some (Read: A lot) of time on the calculations.

You have to count the hours of the normal work cycle of the employee as per their attendance. These hours are charged as per the normal pay scale of each employee.

Then, you need to bifurcate the hours of overtime because those are usually paid separately with hiked pay. Most of the organizations pay double salary for the overtime. However, it depends on the position as well. If the employee is in a managerial position, then they may not receive overtime for a certain amount of hours. So, you have to consider that as well in the calculations.

Overtime is usually calculated with the gross pay of the employee rather than net pay. Hence, you need to calculate that further to move forward.

Lastly, remove deductions from this pay such as PF, ESI, TDS, etc. This step is essential because it is linked to several compliance regulations. If you don’t submit the PF but deduct it, you can not only suffer fines but also lose your reputation in front of employees.


3) Pay
The final step of the payroll India process is to pay the employee. Send the payment electronically, schedule it, or visit the bank and transfer it before the salary day. Don’t leave this task for the end day as various circumstances can cause a delay in the payments of employees

For more details you can contact us TeamTAXAJ
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