Payroll is the complete list of employees who receive remuneration that is paid by a company for their services. It is a vast term that has several parts such as employees’ information, amount to be paid as remuneration to each employee, bonuses, incentives, deductions, taxes, leaves, overtime, benefits, and attendance of each employee. Every element complies together to process a company’s payroll. The entire cycle is known as the Payroll Processing of a company.
Every company pays compensation to its employees mostly every month for the services they render. Thus, payroll becomes the most crucial part of an organization.
Payroll Processing has three major stages:
- Pre-payroll processing: It involves gathering employee data, evaluating it, and defining payroll policies.
- Payroll processing: Actual payroll is calculated and processed in the payroll software/system.
- Post-payroll processing: Accounting, reporting, filling.
Large steps involved in calculating Payroll
- Onboard employee
- Define Payroll Policy
- Gather inputs, employee data
- Data validation
- Payroll calculation
- Disbursement of salary
- Pay statutory dues
- Payslip distribution
It is very important to stay compliant while processing the Payroll of an organization. The legal framework is made of components like TDS (Tax Deducted at Source), PF (Provident Fund), PT (Professional Tax), ESI (Employee’s State Insurance).