For most employees, your company offers the primary source of income. Hence, correctly dispatching the payouts is imperative.
Making mistakes in these circumstances leads to reputational loss for the company. For this reason, in this article, we have discussed some important factors for payroll processing that can help HR managers
What are the different stages of Payroll Processing?
Let’s start by understanding the different stages involved in payroll processing. Then, we will also discuss how payroll services providers can help you in each stage.
The pre-activities involved in payroll processing involve the following:
- You should have a payroll policy involving different factors like attendance policy, benefits and leaves, and pay policy. This policy should become the go-to document in case of doubts.
- The second factor is the process of gathering inputs. How are you getting attendance and leave data? What is the method of collecting approval and leaving with pay? Many companies have an attendance tracking system for the same. Ideally, if you work with a payroll outsourcing service in India, you can integrate your attendance tracking system with the payroll management system.
HR and Payroll Processes
The actual payroll processes involves salary calculations every single month. For example, if your salary dispatch data is 7th of next month, HR should start calculations and recalibration from 30 or 31st of each month. Using an HR and payroll management system in India can help you automate these tasks.
**It is best to revalidate your results to avoid mistakes, miscalculations, and salary delays.
Once the payroll is calculated and dispatched, you must complete a few necessary tasks. These include:
- Compliance is important. You must deduct and submit PF, TDS, and ESI for every employee depending on their salary range.
- Apart from compliance, payroll accounting is extremely important but often overlooked. Payroll data should be updated in HR books.
- Once the above requirements are completed, payroll or bank transfer is generated for every employee. Usually, this is automated or manually achieved depending on the tech availability. Using a payroll service provider helps you mitigate the challenges of manual work, as they have the right tech and expertise to achieve these activities in less time. One of the final requirements in payroll processing is reporting. After the salary dispatch and other compliance activities, HRs should create reports to know HR efficiency.
Things that HR Managers should do
HR managers can improve payroll processes, avoid delays, and reduce errors with the following tips.
1. Clean Your Data
The first step towards better payroll processing is clean data. You should have clean records for onboarding, salary dispatch, retirement benefits, taxes, deductions, and everything else. Your data should be clean and accessible. If your payroll data is in a disarray, you won’t have proper access and historical data to draw upon.
Payroll outsourcing services in India can help you organize your data for clean and feasible access.
2. Verify Details
From time to time, every HR should verify its sheets and data. This is because there are some changes in the payroll processes every quarter. For example, an employee left and a new one joined. Another example is COVID paid leaves.
These changes should be recorded clearly. Therefore, at regular intervals, you have to keep verifying your details.
3. Assess Payroll Costs
Once you have cleaned your data, you need to know the costs you are paying to payroll processes. The payroll cost of the business helps you make better decisions.
When you are a small company, it does not cost much to prepare payroll in-house. Many times, company owners take on this task, so there’s no additional cost.
But, when your employees increase, your workforce requires HR to answer their queries. So, at this time, you increase your payroll budget to hire and maintain an HR employee.
Similarly, the requirements exponentially increase with the growth of the company.
Knowing payroll costs at every point helps you make the right decision. For example, at one point in your business, you will realize that a payroll service provider may be able to offer you a beneficial deal. This means you would be able to save more money on payroll processing with outsourced payroll solutions. So, always track your payroll costs to take this decision for the benefit of the company.
4. Prepare Annual Reports
One of the important things that most businesses avoid is reports. You have to create HR reports regularly to know if your HR department is operationally efficient or not.
What is the cost of inaccuracy in your payroll processing?
How much are you paying for payroll mistakes every year?
Factors like these help you make important changes in the payroll processes.
5. Make Payments on Time
If you are not paying taxes or dues on time, you can easily attract penalties. This means that every business deducts taxes from employees’ salaries every year. When these taxes are not paid on time, the company pays for mistakes. This means the tax department quickly imposes a penalty on you.
Hence, more than anything, track your payments and taxes.
With that being said, it may not cause you actual penalty when paying employees late, but you lose employee’s trust in the company even if this happens once. This can also mean that you lose some of your valuable employees even when you are late in paying employees on time.
6. Keep Up with Compliance
The payroll in India has a series of compliance requirements. Unfortunately for the HR manager, these requirements keep fluctuating. This is because rules change, which makes compliance more and more complicated.
As the HR manager of a business, you have to keep updated with compliance. What regulations have been modified? How can you implement new rules?
In this case, using outsourced payroll solutions can help you because the provider team will check updated rules and help you stay compliant. Your team just needs to coordinate and keep up to date with various activities.
Additional tips to keep in mind
There are some additional tips that help HR managers to improve payroll processing:
- Always know the number of people you need in the HR department to function peacefully without challenges and errors. If you are hiring outsourced payroll solutions, then know the support you need from the provider. This helps clarify the requirements from the start and eliminate glitches in the long term.
- Always segment your employees depending on the categories in your office. We don’t pay every employee in the same manner. This is to say that an hourly employee is not paid similar to a full-time employee or a freelancer. There are different segments and payments for the same. Likewise, there are different expectations for every segment of employees. Therefore, segment your employees, create guidelines for every segment, and operate accordingly.
- Always track employees in the company. You should keep their details handy for different compliance and tax purposes. Employees may become frustrated if they lose this information on a regular basis.
- Always have a dedicated budget for payroll activities. If you are using the HR and payroll management system in India, you will get a fee bifurcation from the provider. This budget should be separate for HR activities to allow smooth functions month after month.
- Have a specific schedule for payroll activities. While it may be easy to push payroll to the backseat and never think about it till the pay date, you should regularly visit these records. You need to keep these records updated and well-documented. So, create a schedule and share your requirements with the payroll service provider for clear expectations.
Payroll processing may appear to be the simplest function of the workplace until your workforce starts increasing. Once you have a considerable number of employees, you may start experiencing issues in managing payroll processes. This may cause delays, errors, and inaccuracies, which can lead to penalties, fines, and worst of all, reputational losses.
For this reason, choosing the right payroll service provider at the right time is the key. TopSource Worldwide is one such payroll outsourcing services provider in India. With years of experience and knowledge in the domain, we are able to help businesses in different domains with payroll processing. Our experts can help you streamline your payroll system, improve operational efficiency, and minimize errors (and manual processes). Learn more about our services. Reach out to us for more details.