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It is the responsibility of the organisation to plan the salary components to save more taxes to their employees and give them the maximum benefits. Payroll processing refers to calculating the final “net pay” of the salary after adjusting the deductions such as Provident Fund, ESI, Profession Tax and taxes i.e., TDS.
We will handle the salary calculations of all the employees, statutory deductions, taxes and will provide the calculation sheet to the bank for crediting the salary to the employee’s bank account.
The net salary to be paid depends on various factors. It will be affected by the company's various policies such as pay policy, leave and benefits policy, attendance policy, etc. So, the first step, would be to define the policies and then get approved by the management to ensure standard payroll processing.
TPayroll process involves collecting the data from the employees and the organization to understand the calculations that needs to be performed in the payroll process such as attendance data, bonus. Increment, employees notice period, Loss of pay etc.,
Once all the relevant information is received, we have to ensure the validity of the data whether it complies with the company policy, authorization/approval matrix etc. We also have to be careful that all the active employees are included and the inactive employee records are not included for salary payment.
In this step, the validated input data is fed into the payroll system for actual payroll processing. The result is the net pay after adjusting necessary taxes and other deductions. Once payroll process is over, it is always a good practice to reconcile the values and verify for accuracy to avoid any errors.
In this step, we will calculate the “net pay” after adjusting the deductions and taxes by considering the information received in the step 1. After calculation of the payroll, it will be sent to the management for their due review and will obtain the final approval.
After obtaining the final approval from the management, details will be downloaded from the Provident Fund, ESI and Profession Tax website relating to the employees and fill as per the government formats.
Accounting has to be done based on the salary calculations arrived and entries need to be passed in the ERP or Accounting application for reflecting the entries in the books of accounts.
At this stage, we will send the net salary details of all the employees to the bank to transfer the payment to the employees.
At last, the payslip will be sent to the employees who have provided their email ids for communication.
