A business idea needs people who can execute it. For some time you may even run the show all on your own but eventually, everyone realises the need to get more people on-board to attain the business goals. As you on-board your first employee, you become responsible to make sure he/she is paid on time. When more employees join in, you get introduced to terms like payroll processing, pay period, TDS form 24, labour law etc.
Already feeling overwhelmed? Do not worry, we'll take tiny steps and discuss how you can set up effective payroll for your business, especially if you are a small business.
This information involves,the employee’s personal details and financial details like PAN, PF number etc, last employment details especially if the employee has joined in mid of the financial year, in that case employee needs to submit income and tax deducted details from previous employment for calculating overall tax liability and balance TDS is then deducted and deposited.
Let's take an example. Some organisations go for the calendar year(January 1st to December 31st) as leave year and for payout stick to the financial year(April 1st to March 31st). The gap of three months( January to March) gives time for finalising year end-leave related aspects. The same policy once approved forms base for monthly payout and tax calculation. At this stage, you can also select the infrastructure you want for your business to record the attendance of your employees.
It is the period for which an employee is paid. Various countries run payroll monthly, weekly, bi weekly, daily etc. In India, most frequently used pay period is monthly. Ie., 1st – 30th /31st of a month.
Some companies follow the payroll cycle as the calendar month and some companies follow their own specified pay cycle for their administrative convenience.
Running payroll means calculating the payout for each employee, after considering the leave and attendance data and policy, expense and reimbursement claims , tax withholding requirement etc. Many a times small businesses go for excel sheets manual approach, where they set up formulas to do the calculation but it can put them in a bad situation if the calculations are not comprehensive and accurate.
Today, there are payroll software available that cost as low as Rs 10 per employee per month. Advanced payroll software like greytHR not only automates payroll but also automates your leave and attendance management, expense reimbursement along with Statutory compliance.
Statutory compliance is very critical. Make sure that the payroll software that you choose takes care of statutory requirement like calculation of tax to be deducted from salary and deposited with government and other authorities.
Your employees major source of income is the money that you dispense as salary. Your employees can have queries like validation for tax deducted from his monthly salary, his last three months salary slips, his overtime payment etc. Many payroll software provide employee self service feature which help employee to log in and see his attendance, pay and tax computation etc, it also helps payroll officer focus on his core function.
Clearly the payroll function is no more just about calculating the net pay and releasing salary checks, but it had evolved to become a comprehensive function. For beginners it can look little daunting.
While payroll is a complex process, with advanced payroll software available in the market you can automate a lot of procedures and ensure accuracy and efficiency. Check out greytHR payroll software, smart and easy to use software built specially for small and medium businesses. It not only helps you process accurate payroll every month but it also comes with in-built statutory compliance, expense management, leave and attendance management modules.