WHAT IS PAYROLL?
Updated on : 2020-Nov-20 15:55:35 | Author :
PAYROLL
Payroll mistakes will happen quicker than you think. For a moment, suppose the staff for whom monthly wage is that the only source of income. Imagine what if the wage isn't paid accurately or there's a delay in releasing wage. Such irregularities will take a toll on the morale of the workers and ultimately have an effect on business productivity.
While guaranteeing correct and timely payment of salary is very important, adhering to the assorted laws and rules like labour law, PF, pt and other statutory compliance is also crucial. Non-adherence with these laws will attract serious legal and money consequences.
To make sure that your workers are happy and you're law compliant, you would like to possess a correct understanding of what payroll is and the way to run payroll effectively. We’ll start with the fundamentals of payroll.
What is Payroll?
Payroll is a list of staff who gets paid by the corporate. Payroll additionally refers to the full quantity of cash employer pays to the workers. As a business function, it involves:
1. Developing organization pay policy as well as flexible advantages, leave encashment policy, etc.
Defining payslip components as basic, variable pay, HRA, and LTA
2. Gathering alternative payroll inputs (e.g., an organization’s food vendor may provide data regarding the amount to be recovered from the staff for meals consumed)
3. The particular calculation of gross regular payment, statutory similarly as non-statutory deductions, and arriving at the net pay
4. Releasing employee salary
5. Depositing dues like TDS, PF, etc. with appropriate authorities and filing returns
In short, we are able to say that the payroll method involves arriving at what's due to the workers conjointly referred to as ‘net pay’ when adjusting necessary taxes and other deductions.
The equation for calculating the net pay
Net pay = Gross income- gross deduction
Where,
Gross income or salary = all types of standard income + allowances + any one-time payment or profit
Gross deduction = all types of standard deductions + statutory deductions + any one-time deductions.
What are the stages of processing payroll?
A payroll officer has to do careful planning. There are always current tasks that need attention and a continuing need to monitor changes to withholdings, contribution to social insurance funds, etc. the complete method will be split into 3 stages, pre-payroll, actual payroll and post payroll activities.
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