All you need to know about Post-Payroll Activities

Post-Payroll is the third and final stage in the Payroll Process. The whole payroll process comprises three phases; the first-pre-payroll activities, the second- actual payroll process, and the third one post-payroll activities. The process is prolonged and incorporates gigantic tasks. Each task plays a significant role as payroll is a crucial segment of every organization whether small or big.

Let’s understand a few basics.

What is Payroll?

Payroll is the process by which employers pay an employee for the work they have completed. Any business with employees should have a payroll management process established. An effective and efficient payroll process ensures that employees are paid accurately and consistently and gives HR the chance to focus on other aspects of their job.

Processing payroll is a very important function of any business and necessitates an understanding of current regulations, detailed tax knowledge to ensure proper withholding and filing, and a highly organized system that can be relied upon to pay each employee the right amount of money.

Phases of Payroll

Phase-1 Pre-payroll activities

Before reaching the actual amount of money to be paid to employees, the payroll process needs pre-planning. This planning covers a major segment in the entire gamut of payroll processes. This process is called pre-payroll activities.

It involves setting up the salary structures, payroll cycle, gathering data of the entire month, validating the data and then using the same to process the actual process which is the step right after pre-payroll processing. Few setups are done as per the company’s policies and few are done as per the law and regulations; statutory compliances in India.

Phase-2 Actual payroll process

This is the stage where actual work towards reaching the net pay of employees takes place, after completing the pre-payroll activities. This is the time when already gathered payroll data (Leave & Attendance data, shift wise calculations, tax and Deductions, Expenses, Incentives) during pre-payroll activities will have to run.

Once you feed the verified data into the system, the result you will get will be the net pay after the adjustments of necessary taxes and deductions. In this stage, you also verify the information to achieve accuracy.

Phase – 3 Post-Payroll Activities

The work does not stop even after the disbursement of salaries. Once the compensation is paid to each employee, post-payroll activities take place.

Post-payroll activities specific to an organization include reporting, declarations, and statements that each employer must produce for the relevant corresponding bodies. In the system, this reporting consists of reports that generate, issues and downloads paychecks.

Post Payroll Activities

• Review, generate and issue of Payslips, TDS Reports, Cash Reports,
• Accessing the Bank Reports and downloading them by choosing a financial year, frequency, period and batch.
• Employee information like Employee Count, CTC, Gross, and Net Pay, Bonus and Loss of Pay, commissions, Processed Date, Processed By etc.

Post-Payroll Process

Statutory compliance

All statutory deductions like EPF, TDS, ESI are deducted at the time of processing payroll. The company then remits the amount to the respective government agencies. The frequency can vary depending on the type of the dues. In most cases, payment of dues is made via challans. After all, dues are paid return/report are filed. E.g., for filing PF return, ECR is generated and filed.

Payroll accounting

Every organization keeps a record of all its financial transactions. Salary paid is one of the significant operating costs which has to be reported in the books of accounts. As part of payroll management, it is essential to check that all salary and reimbursement data is fed accurately into the accounting/ERP system.

Payout

You can pay salary by cash, cheque or bank transfer. Typically, organizations provide employees with a salary bank account. Once you complete payroll, you need to ensure that the company’s bank account has sufficient funds to make the salary payment. Then you need to send a salary bank advice statement to the concerned branch.

This statement is issued with particulars like employee id, bank account number, amount of wages, etc. If you are opting for payroll software that has an employee self-service portal, you can easily publish the payslips and employees can log-in to their account and access the payslips.

Reporting

The last step is to prepare accurate reports containing information such as department or location- wise employee cost. These reports are then sent to the finance department or the management team for further analysis.

Once you complete the payroll run for a particular month, the finance and high management team may ask for reports such as department wise employee cost, location wise employee cost, etc. As a payroll officer, it becomes your responsibility to dig into the data and extract the required information and share the reports.

Statutory compliance in Indian payroll

When you run payroll, being statutory compliant means that you are paying as per the applicable employment norms set by the central and state legislation. The common statutory requirements that apply to Indian businesses include the provision for minimum wages, payment of overtime wages to workers, TDS deduction, contribution to social security schemes such as PF, ESI, etc.

While computing salary you need to consider all these deductions and contributions. Income tax is one such deduction. At the beginning of the year, the employee is asked to make a declaration about his additional incomes, tax-saving investments, etc. called an ‘income tax declaration.’ Accordingly, an employee’s tax liability is calculated, and TDS is deducted.

Various methods available to do payroll for your business

The possible options for running payroll can be

• Excel-based payroll management
• Payroll outsourcing
• Using payroll software