Micro, Small, and Medium Enterprises (MSMEs) and startups are the backbones of the Indian economy. They play a significant role in the country’s economic growth. However, they face a range of challenges, including the management of their payroll. Payroll management is an important function that requires accuracy and compliance. Traditional payroll processes are cumbersome and take up time and resources. This is why many businesses are now turning to payroll management software to help streamline their payroll processes. Before getting started, everyone must know the basics of it. Let’s begin with its definition:
What is payroll management software?
Payroll management software is used to manage and automate the payroll process. It automates the process of generating paychecks, calculating taxes, and other tasks associated with payroll processing. It can also generate payroll reports, reconcile discrepancies, and ensure compliance with tax laws.
Employers can easily calculate employee payroll taxes, withholdings, and deductions with this software. It can generate paychecks and pay stubs for employees. It can also be used to manage employee benefits, such as vacation time, sick leave, and health insurance.
In addition, it can be used to generate reports and analyze payroll data. This data can be used to identify trends and potential issues and create a better understanding of employee compensation.
How to process payroll?
When payroll software process the payroll of employees, it includes eight steps: Employee onboarding, payroll policy defining, gathering employee documents, validating details, payroll calculation, salary disbursement, statutory payments, and payslip sharing.
Introducing new hires to the company is necessary. This includes setting up their accounts and collecting essential documents such as PAN and Aadhaar cards. The HR has to create a comprehensive list of employees and they update it whenever they hire new employees. Here, staff management software with a payroll module can help you onboard the employees efficiently without any problems.
Payroll policy defining
This step involves creating a comprehensive payroll policy for your business. You must establish a pay policy outlining the net amount paid to employees in different roles and positions. Additionally, you should divide the salary structure based on the benefits you are offering, such as flexible benefits, HRA (house rent allowance), etc. You must also define your leave and attendance policy to ensure that employees adhere to the company’s policies and regulations.
It eliminates paperwork and makes it easy to manage your payroll tasks in one place. Simply enter the salary amount, and the software automatically divides the salary into all components. This streamlines the payroll process and saves time.
Gathering transactional details
Employee information such as PAN and bank account details are vital to the employee onboarding process. However, more data is required for payroll processing, which can only be obtained through collaboration between small organizations’ finance and HR teams. This includes leave and attendance data, income tax declarations, eligibility for benefits, shift timings, comp offs, and reimbursements claimed.
Intelligent payroll software makes it easy to manage all your payroll needs in one place. It allows you to process payroll quickly and lets employees make their tax declarations. Your software must support the old and new tax regimes of India.
Before executing payroll, it is important to validate all inputs collected in the previous step to ensure that everything complies with company policy. Additionally, ensure that all active employees are present in the record and that any inactive employees have been removed.
Calculating payroll can be intricate, as it involves arriving at the “net pay or gross salary” for all employees after accounting for deductions and taxes. Mistakes in either manual or spreadsheet calculations can be costly, as a missing zero or an additional one can result in substantial payroll errors. These errors can have serious repercussions, such as incorrect salary payments, incorrect tax filings, and a breakdown of employee trust.
After all the calculations for payroll, you don’t have to worry about transferring funds to the employees’ salary accounts. With payroll software, you can easily complete the process with just three clicks. It will include all the details like employee name, ID, salary, and more in the salary bank statement sent to the respective branch. This eliminates the need for manual calculations and ensures accurate results with ease.
Managing payroll is a complicated operation with the requirement to calculate and file statutory deductions such as TDS (Tax Deducted at Source), PF (Provident Fund), and ESI (Employee State Insurance). Failing to pay these on time can result in legal penalties for your business. An efficient payroll management software can ensure you meet all your statutory requirements with ease.
The final step of the process is to make payslips available to employees. Indian law requires employers to do this. It makes the process easy- there is no need to send it to each employee separately, and you can generate or share them with your staff in a few seconds. Employees can access their monthly payslips through the payroll app at any time. You will also get a lot of options for salary slip structure.
Ready to get started?
Advantages of using payroll management software.
- Ensures accuracy: Managing payroll manually can be costly for small and medium enterprises (SMEs). Not only can it result in hefty fines for incorrect employment taxes, but it can also lead to legal repercussions for incorrect employee salary calculations. Automated payroll software can eliminate the risk of human error by calculating withholding taxes and salaries.
- Data security: Payroll data is critical for businesses of all sizes, and its sensitive nature requires special protection. To prevent potential threats, an efficient employee management system will secure sensitive information such as mailing addresses and bank details. Reliable payroll management software can provide the necessary security to ensure your payroll data remains secure.
- Time and cost saving: By investing in payroll software, small businesses can automate the payroll process and save time, money, and manpower. Additionally, it is available on the Cloud, allowing companies to pay for the service on a monthly, quarterly, half-yearly, or annual basis. These savings can be used in other essential parts of the business instead of investing in managing payroll manually.
- Analytics on the spot: Manual methods and processes can be time-consuming and often result in incomplete or inaccurate data. In contrast, it can provide multiple reports, including reconciliation reports, payroll statements, and other user-defined and statutory reports. This makes it easier to manage payroll and access accurate data.
- Seamless tax management: As tax and superannuation regulations become increasingly complex, small businesses can find it challenging to keep up. It can be a great asset in keeping its system up-to-date with federal and state requirements and streamlining the process of paying employees electronically. Not only does this save time, but it also ensures that you remain compliant with current regulations.
What should you consider for choosing the right payroll management software?
- User roles customization: For maximum security, it should provide a way to differentiate the roles of each department to ensure that only authorized personnel have access to confidential data. You can do it by assigning roles, setting permissions and module-based access, and inviting staff from other departments to collaborate on the payroll process. Multiple departments can work together by taking these measures while protecting sensitive information.
- Integrated leave and attendance: When looking for payroll software, ensure that it either has an integrated leave and attendance module or can be easily connected to a leave and attendance management system. You should be able to customize the organization’s leave policy, attendance cut-off cycle, and shift-based work hours. Additionally, the software should allow you to integrate with a biometric device of your choice to have precise clock-in and clock-out data for employees.
- User experience: Computing payroll can be complex, even with just one employee. To make it easier, you should choose payroll software that is user-friendly and easy to learn. This way, your staff, and employees can properly understand the program quickly without having to go through extensive training. With the right payroll program, you can ensure that your payroll processing is efficient and accurate.
- Accessibility: Take advantage of the convenience and freedom of a cloud-based payroll system that lets you access data remotely with an internet connection, a web browser, and a suitable device such as a mobile phone or tablet. This way, you can access your information anytime, anywhere. Plus, mobile versions of cloud-based applications enable your employees to easily stay in the loop by seeing your updates and viewing their payslips immediately, even when they are not at the office.
Every startup and MSME must match the pace of corporate advancements to be competitive in this business world. Whether it’s about using new technologies or leveraging its power. To stay ahead, you must save time to focus on companies’ strategic growth, which can only happen when you use the appropriate software to make your mundane tasks easy and efficient.