All You Need to Know About Payroll and Payroll Management Software for SMEs

Payroll is not only the salary payment of the employees for their work hours but it includes the precise calculation of their wages, deductions, and other financial records that include allowances, income tax rate, on-costs, and much more. Payroll management is crucial for enterprises as it measures the details of employees. To attain success, the enterprises not only need to have financial stability but also comply with the laws. Payroll computation for small and medium-sized enterprises (SMEs) is a tedious task. A mismanaged payroll can impact an organization in a very negative way and can lead to issues like delayed processing of payroll, inaccurate calculations of wages and deductions, delayed and wrong statutory remittances, etc.

Inappropriate payroll management is a sign of an inefficient organization, therefore, it is important to clear the concept of payroll and how to manage this process efficiently.

What is the Purpose of a Payroll?

Proper processing of payroll ensures that all employees receive their payments on time with the right payments and deductions. The HR department, especially the payroll staff is responsible for paying the employees as per the organization’s guidelines.

Small enterprise owners generally opt for a manual payroll process and outsource the services of a payroll service provider to calculate the wages precisely. However, this can be done seamlessly with the right HR and payroll management software which is apt for small and medium-sized businesses.

Different Stages in Payroll Processing

• Establishing Payroll Policies:

Setting the right payroll policy is the first stage of a payroll process. These payroll policies may vary from a full-time employee to a contract-based or part-time employee, hourly employee, and independent contractors. The type of payment cycles can also vary depending on the

type of employment. Having a defined set up for coverage of all such scenarios will ensure standardization.

• Understanding the Salary Components:

Salary components comprise the bifurcation of fixed, variable, and formulated components. Understanding the dependency on other components for calculation, applicability for statutory calculations, the impact of attendance, and even the rounding off of values, etc play a very important role in configuring the pay components.

• Gathering Inputs of Employees for Precise Calculations:

Gathering employee’s inputs is quite time-consuming. Inputs can be required from different channels like attendance portals, loans, extra shift charges, paid leave, health insurance plans, and other miscellaneous expenses.

• Validating Inputs

In this crucial step, the collected data is then validated to eliminate any error at a later stage.

• Executing the Payroll

Post receipt of all inputs, the payroll has to be executed. In this process, the wages, income tax, statutory and other deductions are calculated.

• Payment of Statutory Payments

There are some mandatory state as well as central government rules wherein the employers need to deduct a calculated amount from employees’ wages. It is a critical aspect of the payroll process, as non-payments or delays in payments can result in huge tax penalties. Some payroll statutory deductions are:

1. TDS
2. Employee Provident Fund
3. Employees State Insurance (ESI)
4. Professional Tax

Management of Payrolls in Start-ups and SME’s

Payment processing on excel sheets

Many SMEs still manage their payrolls on excel sheets manually. It can be a favorable practice till the number of employees is less than 10. But once you exceed this mark, the payroll processing can be a tedious task on an excel sheet. The drawbacks of excel sheets are-

• Manual data entry
• Manual data processing
• High probability of errors
• Statutory compliances need to be manually entered on a regular basis
• Manual addition and removal of entries

Outsourcing Payroll Management Services

The other mode of payroll management is outsourcing. However, the enterprise needs to share its policies and sensitive data with the third party regularly which can be risky if proper controls are not in place. Payroll outsourcing services can also be expensive. So, it would be wise for enterprises to manage payroll processing by employing an automated payroll system.

Automate Payroll Management with Payroll Software

Employee payroll management system software can be tailored according to the organization’s needs, which is capable of managing, processing, validating, and checking inputs on a single platform. Attendance and payroll software can offer a holistic experience of payroll processing and make it easier for you to reduce dependability on external third-party resources and process chunks of data effortlessly.

Uses of Payroll Software

Some of the uses of payroll software for small businesses are listed below that may match your requirements:

• Increasing employee headcount

The payroll software can process and store a large amount of data easily and also provide the flexibility to address the increasing employee headcount.

• Simple operations

As the payroll processing is automated, every input is driven as per your existing policy and there is no need to manually input data. Thus, by employing this cutting-edge technology, you can save a significant amount of time and effort that may be wasted on manual payroll processes.

• End-to-end solutions

This cloud-based HR and payroll software is a one-stop solution for all your payroll management needs, from setting your policies to deducting government payments and auto-publishing salary slips on the employee self-service portals.

Benefits of Payroll Software for Both Employers and Employees

Payroll software has numerous benefits for both employers and employees alike:

●       Cost-saving

Efficient Payroll software can save the expenses of paper-based / manual processing and help you invest your savings into business expansion.

●       Time-saving

Manual payroll management is tiring and this software can save you valuable time through its automated processing.

●       Accuracy

The payroll software eliminates any margin of error due to manual human processing. Thus, your employee payroll will be calculated in a precise manner.

●       Statutory updates

The statutory updates in the Indian payroll system can get confusing for the HR team as they may overlook certain legal requirements while processing the employees’ payroll manually. This can be overcome in payroll software.

●       Storage and accessibility

Cloud-based payroll software enables you to store as much amount of information as you need and access it conveniently. Your entire data including annual reports and payslips will remain safe.

Payroll Software Integration

Payroll software can be integrated easily across different systems of the enterprises for:

• Hourly captures:

It can track time for jobs like consultants and auditors that are time-specific and based on hourly rates.

• Attendance & Time Management:

It can monitor and calculate the working hours of employees and also have the capability to record overtime hours, work-from-home requests, and more.

• Leave Management System

It can capture different kinds of leaves like sick leave, paid leave, and holidays. This data is beneficial to calculate extra pay for prolonged shifts or deductions if any.

• Accounting System

The payroll data can be sent to the accounting system for cost booking. The detailed salaries and other benefits are precisely recorded as employee expenses which need to be monitored and accounted for.

Cloud-Based Payroll Software

Most of the payroll software is cloud-based which enables data access from anywhere and anytime. Cloud-based systems are also a good backup as compared to your physical data which is susceptible to damage or theft. The self-service portals enable the employees to view their payslips, apply for leave, and outreach benefit programs like personal loans earned wages, etc.

By employing payroll management software, enterprises can overcome the challenges that HR teams face regularly. So, if your HR department is also struggling to manage all the payroll-related tasks, no need to worry! Try APPI, one of the best payroll software in India from Integrum Technologies that lets you complete the payroll and salary payouts in two simple steps. To know about the APPI payroll software system, contact Integrum Technologies now!