Payroll

We all know that every person do Job for the money to complete their needs and desires. Any company in the world pay some amount to their Employees or Workers (person who work in their company).Payroll is related to payment of employee. Tax and Services provides information Payroll in simple and easy term to their audience.

Payroll means a list of employees who get compensation or paid by the Company for a set period of time. The payroll is the total amount of money that an employer pays to their employees along with their employee information during each pay period.

The term Payroll also refers to a Company, Department, or Software that is used to process taxes and paychecks or to the process of calculating and distributing employee paychecks. Payroll is usually managed by the Human Resource or accounting Department in a Company. It can be differ from one pay period to another because of sick pay, overtime and other variables.

As a business function Payroll includes following:-

§   Components of pay slip like basic, variable pay, HRA and LTA

§   Company’s Pay policy including flexible benefits, leave encashment policy etc.

§   Gathering other inputs of payroll

§   The real and correct calculation of gross salary, statutory as well as non- statutory   deductions, and arriving at the net pay

§   Releasing employee salary

§   Depositing dues like PF, TDS etc with appropriate authorities and return filing

It is very important that a payroll of a company is processed in a way that is reliable and efficient because it is the single largest expense for most companies. Payroll must be accurate each and every time. Using payroll systems can help to reduce stress and minimize errors.

Options to run Payroll

Following are the options to running a Payroll in a Company:-

Ø Do Payroll by hand

Ø Use a Payroll Accountant

Ø Use a Payroll Software

Stages of Processing Payroll

Payroll Officer always needs to do careful planning because there are ongoing task that need attention and a constant need to monitor changes. At tax and Service, payroll process can be split in to three stages which are as follows:-

    Stage 1- Pre-Payroll activities

Ø  Defining Payroll Policy

Ø  Generating Inputs

Ø  Input validation 

    Stage 2 Actual Payroll Process

Ø  Calculation of Payroll 

    Stage 3 Post Payroll Process

Ø  Reporting

Ø  Payout

Ø  Payroll Accounting

Ø  Statutory Compliance

Calculation of Payroll

Calculation of Payroll is a very important part of Payroll process. The calculation should be followed very carefully to ensure that there are no mistakes in the amount of net pay issued to employees and taxes paid to the government. At Tax and Services, Steps to calculation of Payroll are as follows:-

·       Notify all employees of  company to complete their timesheets by the close of the business on the last day of pay out period

·       Collect timesheets from employees

·       Review and approve all timesheets

·       Enter the hours worked

·       Enter the wage rate changes

·       Then Calculate Gross pay

·       Calculate Net pay

·       Review

·       Pay all employees

·       Remit Taxes

·       Distribute Pay

Equation for Calculating Net pay
Net pay = Gross Income – Gross Deductions                       Where,

Gross Income = All types of regular Incomes + Allowances + Any one time payment or benefit

Gross Deduction = All types of regular Deductions + statutory Deductions + Any one- time Deduction