Payroll processing is a complex task that has to function with greater accuracy. Discrepancies in the payroll affect the business in multiple ways. Firstly it creates friction with the employees leading to a lack of understanding and cooperation and promotes ill will. Secondly, it affects the relationship with the Government authorities as the returns submitted are inaccurate. This would entail paying fines as penalties. When this happens, the company loses the confidence of its employees and the goodwill of the authorities. This will have adverse effect on the growth of the company.
Steps to process payroll with 100% accuracy:
Step 1: Deciding on the process to handle payroll processing
Payroll processing can be handled in three different ways and they are …
- Manual Processing: Here you can use worksheets like Excel to manage payroll. For companies with a handful of employees, this may be suitable. However, for companies with a larger workforce, this not only becomes cumbersome but is also prone to inaccuracies as the chances of clerical or mathematical errors are high.
- Using Payroll Software: When you decide to move from manual processing to using readymade or customized software, you are paving the way for an automating system that can save a lot of time and generate highly accurate reports. This will help you to avoid a lot of problems and create a better understanding with your employees and also keep the company compliant. But they do have their disadvantages.
- Outsourcing Payroll Process: This is by far the best method to process payroll with great accuracy. Here the entire operations are entrusted to an external agency that is highly experienced in handling Statutory Compliance issues and recruitment. You achieve full automation when you associate with an outsourcer as you get a wholesome package that integrates all the modules seamlessly.
Make your choice!
Step 2: Preparing the Employee inputs:
This is a very vital step and has needs great care and accuracy. Good to remember the acronym GIGO – Garbage In Garbage Out. Check for correctness of all the data that is input. Any mistakes here would be reflected in all the information till such time it is identified and corrected.
Step 3: Ensure proper classification of employees:
This is an important step and has to be handled with utmost care. Once the employees have been properly classified according to their designations and nature of work, the tax dues, EPF & ESI deductions, overtime wages, minimum wages, and other dues are recorded. Any mistake here would entail payment of back wages and taxes and also penalties to government bodies for submission of inaccurate returns.
Step 4: Accurate tracking of Time and Attendance:
Time and attendance have to be tracked meticulously, especially for those employees who earn on an hourly basis. An efficient time and attendance software will be able to handle this task properly and can also prevent time theft.
Step 5: Achieve full automation:
When you achieve full automation, you are in effect drastically avoiding inaccuracies. Full integration of the entire module is required to achieve this task. This will enable you to achieve full automation and all the relevant information will be at your fingertips. The payslips, the Leave and attendance details, the statutory deductions, and taxes are accurately posted during the process.
Step 6: Check Statutory Compliance and Tax issues:
You must fully understand and implement all the Statutory Compliance rules and regulations. So also the IT and Professional tax dues have to be maintained. These are extremely important issues that need to be followed strictly. You should be aware of changes enforced by the authorities and be able to implement these changes as and when they announce these changes.
Step 7: Maintaining Data integrity and security:
This is critical if you are to manage payroll accurately. Constant checks to maintain data integrity and quality have to be performed. Similarly, Data Security is important as this involves the vital data of all the employees. Careful maintenance of this aspect is important.
Step 8: Maintain regular communication with the employees:
Regular communication with your employees is a must as it will provide you with better inputs to develop the system. They can identify any lacunae in the system and this will help you to make necessary changes in the system.
Step 9: Regularly review the system:
When you regularly review the payroll system you get a better understanding of its performance and overall functionality. This will help you to make appropriate changes for greater accuracy.
Payroll processing is a time-consuming and mundane task when handled in-house. If the need is to generate accurate reports and keep the company fully compliant, then the obvious choice is to outsource your payroll operations to an external agency. GetifyHR is one of the leading outsourcers of payroll processing in the country. Their cloud-based payroll system is fully integrated and provides highly accurate information to the company and its employees. The system also very meticulously handles all the compliance and tax issues.