Tips for Corporate Payroll Management

Tap to Read ➤ Payroll is one of the most crucial areas in running a business. Apart from paying wages, it is also about business ethics and responsibility of an employer. Aditya Kulkarni

An employer has to realize that a prompt and successful payroll process is one of the factors contributing to employee satisfaction. A sincere employee has the moral right to expect a systematic and standard system of payment in place.

In medium- and large-sized corporate groups, the 'Human Resource Department' shoulders the responsibility of payroll. They prefer to have trained and skilled resources to take care of the system.

The same is not found in most small-sized corporates or companies that are new. Hiring and paying these personnel adds to the total cost; especially when the cost bearing capacity of an employer is weak, he himself has to run the show and solve such odds.

Outsourcing the payroll system is always an easy option for employers. However, sometimes, the principal employer or the key members prefer to take charge of the payroll system.

Lack of subject knowledge, poor awareness about legal compliance, and scarcity of firsthand experience makes the task more complex. However, awareness of the basic rules and readiness to learn can help an employer to streamline the payroll process.

Here are few guidelines that can help an employer minimize these complications.

Setting Salary Structures

Every company should have its own salary structure. Separating the gross salary into components like basic, house rent allowance (HRA), medical allowance, and other allowances can help an employer assist the employee in managing his taxable income.

As each country has a different taxation system, the salary structure needs to be framed accordingly. Then, as a part of ongoing process, he just has to select and allot a structure to a new employee.

Making Leave Calculation Simple

Prior decision on holidays and leave from work can help the employer calculate the leave of the employees. When an employee takes a leave that he/she is not eligible for, the employer can directly deduct the pay for that day. Maintaining a sheet/log of attendance can help the employer calculate the workdays and pay for the same.

Understanding Legal Obligations

Legal obligations on an employer differ as per the nation's labor laws.

Employee insurance, provident fund savings, old age pension, and gratuity are some of the legal obligations on the employers. However, all are not applicable to an employer; it depends entirely on the legal governance mechanism.

Managing Variable and Reimbursement Components

The variable components should always be kept separate, and the calculations should be based on actual expenses.

The employer can set a system of issuing the reimbursement against claims raised by employees.

However, he would have to set a definite range or a highest limit for the reimbursable components. Travel or telephone expenses are normally taken as reimbursement components.

Timely Tax Calculations

A simple way of solving the problem of computing taxable employee income is to design the salary structure accordingly, separating the taxable salary slabs and non-taxable salary slabs, and making timely calculations and provisions. Prioritizing this work according to urgency and importance would help avoid chaos at the time of year-end closing of accounts.

Easy Full and Final Settlement

Mutually agreed notice periods for resignations, payments in lieu, and parameters of calculating pending leaves at the time of separation should be planned in the initial stage.

All the norms should be incorporated in the appointment letters and the employment agreement. Following it stringently is the simplest way of simplifying the task.

Taking Online Support

There are many employer query-solving forums available on the Internet. This can be one way through which an employer can solve the problem, and also volunteer to consult others.

He can guide others in his/her area of expertise, and can learn from others too. A good network of experts, learners, and mentors can be formed. Checking the genuineness of such forums is the responsibility of the employer.

Finding and Customizing Software

Selecting the right software for a payroll system can be a tedious job, but it can solve crucial problems in the long run. However, before finalizing and purchasing any such software, the following factors should be taken into consideration:

Compatibility Features Reliability Existing clientele of the software company Cost Future requirements and plans Report generation facility In short, with a willingness to learn, right consultation, and punctuality, you can master the payroll system.