Payroll Procedures

When employer pays salaries to his or her employees, it effects many parties like employees, business and government. So, it is very necessary to follow a good and defined procedure of payroll. With this, we can save our time, energy and money from errors in it and then its rectification.

Following are main steps of Payroll Procedures.

1st Step  : Record Employees' Detail

In first step, we classify our employees. Employees may be part time, full time, department, branch employees and independent professional. We have to record their each and every detail in our accounting system.

2nd Step :  Calculation of Payroll

Firs of all, we calculate the gross salary of employee. Then, we calculate different deducations. It may pension fund deduction, employee's health insurance deducation and other EPF deducations. We also calculate all statutory tax deducations of employee. Except this, we also add different allowances, bonus and benefits in balance salary.



3rd Step : Record of  Payroll

Now, in the third step of payroll procedure, we record all the basic salary, deductions and benefits and TDS in the books of company.


4th Step : Edit Payroll System

Sometime, there may be new employees will come and old employees will go. So, we have to edit the system by adding new employees and deleting old employee. Some time, we have to change the position of any employee, at that time, we also change the record of employees. We can also change the rate and time period of working after auditing employee's record or any update in the policies of company.

5th Step : Make the Payments

Now, we pay each employee and tax authorities.

6th Step : Submit Forms and Reports

In last step, time to time, we have to submit reports to central govt. state govt. and to our employers for telling the whole detail of payroll in one year. Specially, it is important in govt. departments and branches.