Payroll Reconciliation is the process of comparing the current month's payroll with the previous month's payroll to understand the reason for any difference. The amount in the payroll ledger has to match that of the current month's payroll.
The payroll team also checks the payroll register to confirm the number of employees, hours worked, Gross Salary, Salary Deduction and amount to be paid out.
A payroll reconciliation report is also generated. The report helps in comparing the amount in the ledger with the amount to be paid for the current month. Reconciliation is also done while filing statutory returns.
When payroll is accurate, audits and tax filing become easier. Also, the employer can avoid legal issues.