What Is Payroll Management in HR?

What Is Payroll Management in HR?

What is Payroll?

When you think of this question, what is the first thing that comes to mind?

Salary! Yeah, but the concept is a little bigger than just salary. It is related to employees’ attendance, leave, payslips, taxes, and complaints. 

Payroll operations involve various activities, such as processing salary, distributing payslips, processing new hire onboarding, creating payroll rules, defining pay components, obtaining inputs, calculating and confirming payout, processing taxes, accounting, and reporting.  

What is Payroll Processing?

As a result, the market for HR software is expanding. It is anticipated to grow by 10%, from 15.59 billion in 2020 to 33.57 billion by 2028.

Payroll is a list of the employees that the company pays. It is the sum of money that employers give to their employees. It is responsible for developing a payment plan that includes leave encashment and flexible benefits for the organization. 

Payroll management involves gathering supplementary payroll inputs, such as the company’s food vendor supplies and includes payslip components, such as primary, variable pay, HRA, and LTA. Payroll and HR administration also include releasing employee wages, submitting returns, and paying liabilities (such as TDS, PF, etc.) with the appropriate authorities. 

The process includes calculating net pay after different deductions and appropriate tax adjustments. Cloud payroll systems are used by 62% of businesses (Source: Alright).

Types of Payroll Processing in India

The payroll cycle comprises a set of regulated steps called the Payroll Management Software, completed monthly in a particular order. As stated differently, the goal of the payroll process is to ascertain the net pay, or the amount payable to the employees, after deducting the relevant taxes and other sums. 

Pre-Payroll Activities

Establishing bank policies for payroll procedures is the first stage in the process. Before these rules may become standards, management must approve them. Policies such as those pertaining to pay, attendance, leave, benefits, and other topics must be approved.

Collecting Resources: At this point, information is received from many departments to guarantee that the payroll is calculated accurately.

Validation of input: Once the data have been collected, it is imperative to confirm their accuracy because even the slightest error can completely undermine the payroll procedure. It is crucial to ensure that there are no records of inactive personnel and that the list only includes active staff. Examine the data to make sure it complies with corporate guidelines. Make sure the present is formatted correctly.

Payroll Calculation

In this stage, the verified input data is loaded into the payroll system to process payrolls. The net pay is the result after deducting the appropriate taxes and other amounts.

To prevent further mistakes, it is usually preferable to reconcile the figures and confirm their accuracy once the payroll process is finished.

Post- Payroll

Legal observance: The payroll administrator must strictly follow the law to comply with it. Several statutory deductions are made when processing payroll, including ESI, TDS, and EPF. Such deductions are made and sent to the appropriate government agencies.

Payroll accounting: It is mandatory for all organizations to uphold a precise book of accounts and to record the wage paid for each key entry in the books of accounts.

Payout: After following the foregoing procedures, the salary can finally be paid in cash, check, or bank transfer. Having the employees’ pay accounts is preferable for hassle-free transfers.

Report: The next step is to compile a report, which must be precise and include details like the department’s or location’s labor costs.

Various Methods of Payroll Management

Payroll management with Excel: A firm that is just getting started or has a small number of employees will use Excel for payroll administration. The standard payroll calculation template is used to calculate in Excel sheets. The payroll officer can compute using pre-established mathematical formulae. But this strategy has a number of drawbacks, including:

  • Due to the manual entry of the data, there is a high risk of clerical and mathematical mistakes.
  • Having trouble adding or deleting workers from the payroll list
  • Possibilities of duplicate data and occasionally missing entries
  • It is necessary to monitor tax updates and other legislative modifications, such as PF, PT, etc.

Payroll Outsourcing:

When the payroll function is outsourced, it is handled by an outside organization. Depending on the monthly pay cycle, the payroll service provider provides other data, such as attendance, leave, and reimbursement information. After that, the external service provider handles legislative compliance and payroll computation.

Difficulties in Managing the Payroll Management Procedure

Processing payroll becomes challenging for these two reasons: 

  • The need to adhere to legislative requirements: Following the law can result in fines and, in the worst situation, even jeopardize the business’s survival. 
  • Reliance on several sources of payroll input: This laborious procedure requires gathering all the data from several sources, such as the attendance register, transportation facility utilized to record, and HR team data, such as compensation revision information before the payroll is completed.

HR managers have used Excel sheets for years to manage payroll. However, manual calculation has several drawbacks, including the inability to extract information, the need for manual data entry, human errors, and time-consuming and complex formulas.

Why Choose HRM Mitra?

We at HRM Mitra know companies have difficulty handling payroll and HR procedures. We provide a thorough HR and payroll administration service that is customized to meet the needs of businesses of all sizes. Our group of payroll specialists and accounting professionals collaborate closely to provide you with the following advantages:

HRM Mitra provides an intuitive SaaS-based Payroll Management Software solution for businesses of all sizes. This is how it will help your company:

  • Automation: HRM Mitra generates paystubs and tax reports and calculates salaries and deductions for payroll. Errors are eliminated, and the administrative load is decreased. 
  • Compliance: The solution ensures your payroll is always compliant by following the most recent tax rules and regulations. This is especially crucial for new enterprises that might not thoroughly grasp tax rules.  
  • Employee Self-Service: HRM Mitra gives staff members access to self-service portals where they may see pay stubs, tax records, and other data. This increases openness and gives your staff more authority.
  • Data Security: HRM Solution takes strong security precautions to safeguard sensitive payroll data. Your data is encrypted and stored safely on the cloud.

For organizations, using Payroll Management Software that is both compliant and efficient is essential. It guarantees that your workers are paid correctly and on schedule, keeps you out of trouble with the law, and boosts the productivity of your entire company. Payroll processing is more accessible and affordable for companies of all sizes using HRM Mitra’s HR Software solution, built on a SaaS-based model. By utilizing this powerful tool, you can lay the ground work for a payroll system that works well for your company and your staff, freeing you up to concentrate on what matters—expanding your new business.