Though the HR department has a long list of tasks to perform daily, the toughest challenge is processing payroll for employees. This process has a lot of levels, so it takes a lot of patience and good communication channels throughout the organizational hierarchy to streamline it without error.
To perform the payroll process, HR must follow the procedures listed below:
1. Decide the number of employees
Even the best HR and payroll software cannot function properly without having many people working in the organization. It is because every company goes through hiring new employees, laying off employees, and dealing with employee resignations. As a result, the data must be correct in executing payroll.
2. Segmentation of employees based on the job profile
There are several types of workers working in a company. They can be classified based on their pay scales, job duties, and employment contracts, among other factors. Employees can be salaried or paid on an hourly basis, and there are also separate categories of employees hired on a contract basis for a specific time frame. The payroll compensation differs from one person to the next, and even the salary deductions are not similar. The new HR must settle everything out before allocating payroll to them. Using HR and payroll solutions from Kredily can help you in the best possible way to do this.
3. Keeping track of employee identity information
The best HR and payroll system in India maintains track of workers’ identity verification and their previous employment history. This information is also needed when filing for income tax deductions and maintaining a bank account. The HR department requires ID documents such as Aadhar cards and PAN cards to keep track of the employee’s information.
4. Make a separate budget for payroll.
For the coming year, HR must prepare a separate budget for allocating salaries to staff. Before drafting the budget, HR must consider expenses such as payroll taxes, provident funds, overtime, and employee perks. As a result, to manage expenditures and make future business choices, a detailed and precise payroll budget must be created using graphs and pivot charts and keeping the organization’s size in mind. If the HR department does not use a cloud-based HR and payroll system, this procedure can be extremely time-consuming and exhausting.
5. Establish a payroll schedule.
Payroll is scheduled differently for each firm. While most businesses pay employees every month, others pay employees daily, weekly, or fortnightly. The HR department may find it easier to manage payroll after having a well-drafted budget. However, HR must remain cautious while deciding the pay schedule organized for the concerned employees.
Check out our free HR and payroll solutions for determining a solid payroll schedule.
6. Calculate the most critical components of payroll.
The most complex and sometimes complicated process is calculating taxes, salary cuts, perks, bonuses, and raises. A business must follow the legal process while considering all the essential factors. There are specific calculations to be made:
- Gross Salary
- Salary net
- Payment based on a contract
- Bonuses, raises, and other perks
- Taxes paid to the government
The best HR and payroll system can simplify this tax deduction process.
The ideas listed above can guide new HR professionals, who can then review their regular practices. HR managers must ensure a high level of professionalism since they are the key business partners of every corporation. As a result, HR must connect its job with its goals and vision and establish a uniform payroll system.