What are Payroll Activities?

Payroll activities mainly consist of record keeping, new employee reporting, check processing, state and local tax compilation, and payments.

On-board employees

As the first step of payroll processing, businesses should on-board employees and prepare a list of employees to be paid.

Define your payroll policy

In this step, businesses should define their policies and get them approved by the management to ensure standard payroll execution. These policies include pay policy, leave and attendance policy, employee benefits policy, etc.

Gather employee inputs

Employee inputs like PAN, address, bank account details, etc. are important for payroll processing. Usually, these inputs are collected from employees at the time of joining by the concerned teams.

Validate employee inputs

Once the inputs are received, check for validity of the details with respect to company policy, approval model, etc. Also, ensure that all active employees are taken into consideration, and no former employees are included for salary and compliance payments.

Calculate payroll

In this stage, the validated inputs are fed into the system for processing payroll. This results in net payment calculations after adjusting necessary deductions and taxes due. These calculations are done using spreadsheets. So, it becomes difficult to reconcile and verify the values to avoid any errors. However, automated payroll software could have eliminated the risk of clerical or mathematical errors.

Disburse employee salaries

Then, businesses need to ensure that their bank account has sufficient funds to make salary transfers. Then, a salary bank advice statement is sent to the concerned bank directing the bank to disburse salaries. All these time-consuming tasks can be avoided with one-click salary disbursement feature of automated payroll software.

Pay statutory dues

At the time of payroll processing, all statutory deductions such as PF, TDS, ESI and PT are deducted. Then, these payments are made to the appropriate government departments with the due dates.

Distribute payslips and tax computation sheets

This step involves payslip distribution employees, along with their tax computation sheets. With an automated payroll system, businesses don’t have to distribute payslips individually. Employees can log-in to their account and access their payslips easily.