Payroll Software is a cloud-based solution that integrates, manages and automates the payroll process in an organization. It Is responsible for handling compliances, calculating payroll, disbursing employee salaries, generating payslips, maintaining the security and integrity of the database and more.
The payroll software streamlines employee salary disbursal since it undertakes all activities related to payroll processing, such as
– Importing the attendance data
– Accurately calculating the salaries by considering regulations
– Making necessary deductions
– Depositing salaries into employees’ accounts
– Generating and sharing payslips, and more.
Hence, they are integrated with other core business systems to provide accurate employee compensation. The employees can also access this software to view and edit their payment data, bank details, and more.
Payroll software automates the employee payroll process by taking care of the mandatory statutory compliances and making it easier for the staff to configure and automate employee payments.
Based on what we have discussed until now, it is clear that payroll management is a complex process. It involves various departments and a huge amount of data manipulation. Similarly, due to its complexity, errors can creep in easily and being a repetitive process, it also becomes fairly monotonous.
Hence, it is suggested to implement a good online payroll software as it has multiple advantages over manual payroll processing. A cloud-based payroll system can transform your entire payroll management strategy right from the way the finances are handled to the way the reports are visualized, while also being much more efficient than the manual payroll and compliance method. Modern payroll software even takes the help of predictive analysis of artificial intelligence to analyse and predict various patterns of your payroll and employee behaviour, such as leave trends, the likelihood of attritions, etc. which can be acted upon to minimize their effects on the business.
So, let us take a closer look at the ways that a payroll software for your company can be deployed:
Deploying a dedicated payroll solution helps take care of the statutory compliances of company payroll. It automates the various tax calculations and other compliances, helping you avoid unnecessary penalties. Additionally, it intelligently tweaks the compliance requirements per the company locale, ensuring that you remain compliant, even when starting a new branch at a different location.
Companies often outsource their taxes and related calculations, which results in additional overhead costs. These costs can be minimized with the help of a dedicated payroll solution, as it can undertake these tasks automatically. Payroll software also helps gain an overview of the company payroll and helps avoid discrepancies. Since the calculations are automated, it also helps prevent any errors in the numbers.
Additionally, cloud-based payroll systems provide better security, making them ideal for safekeeping employees’ financial records. It secures the database against any infringement from internal and external sources. It can also provide secure data abstraction, ensuring that individuals with the right credentials can access the data they require while others are effectively abstracted from it.
With so many advanced features, modern payroll and management software for businesses will help you with anything and everything related to salary management.
So, let us take a look at some of the features which make having the best payroll software such an incredible tool to use for any HR and small businesses:
Having a dedicated mobile app is necessary nowadays due to the advancement of mobile internet technology and the ever-growing use of smartphones for internet usage. It also assures that your employees can be connected with you anytime, from anywhere. That is why most modern payroll software has dedicated apps for accessing their data remotely as well as staying connected with timely updates and notifications.
ESS Portal allows you to provide your employees and managers with any pertaining information at any time and using any internet-enabled device. This makes it easy to keep them engaged while also being transparent with them regarding their payroll, attendance, leaves, etc. They can also retrieve the same information at their fingertips with the aforementioned mobile app. Employee self-service has become a necessary requirement for the most advanced HR payroll management software.
Having an HR chatbot on your phone is like having dedicated HR personnel at your disposal. You can communicate with it in normal language and it would use AI to understand your query and provide accurate relevant results. This feature helps redirect the common employee queries to the chatbot, thus saving HR from repeatedly answering the same doubts and queries, which eats up almost 40% of their usual working hours.
Buying payroll software is crucial as the right system will improve the efficiency of your HR department, while a bad one would vastly increase the time taken in undertaking even simple tasks. Hence, it would be best to ask the right questions before choosing payroll software for your company.
Following are some of the most relevant queries you should ask when choosing a payroll solution:
Before we delve further into what HR payroll software is used for, we need to understand the basic factors which affect your payroll and its various components. Understanding these components will help us comprehend what makes it so tedious.
By ensuring on-time, accurate payments, an all-in-one payroll software helps reduce the associated costs and improve the overall efficiency of your payroll management system with an easy to use interface and simplified processing. It is especially useful for small businesses as it saves their time and effort in providing employee salary on time.
As is common knowledge, an employee’s salary is comprised of their earnings, deductions as well as some other components for statutory compliance. However, one needs to understand these components better to really appreciate the efforts put in by the HR department to run payroll processing and distributing them without errors for each salary cycle.
For our understanding, let us simplify your payroll processing components into 3 categories and take a closer look at each of them to understand how it plays into the bigger picture:
Basic Salary + Net Salary = Gross Salary
The Employees’ Provident Fund (EPF) is an arrangement by the government to help the employees accumulate wealth and prepare them for retirement. Under the EPF, every employee has to contribute 12% of their basic income to the EPF fund, while the employer also pays the same amount as their contribution to the EPF fund. This fund can be used by the employee in case of any emergencies or can be kept as a fund for enjoying one’s retirement period.
Gratuity refers to the additional payment provided by the company to employees who have stayed with the company for a minimum period of 5 years and is leaving the organization. As per the Payment of Gratuity Act, 1972, the employer is required to pay 15 days of salary for each year the employee has spent in the company as gratuity. Gratuity payments under ₹ 20 lakhs are exempted from taxes for the lifetime of an employee.
The first step of collecting data is the most crucial one since the subsequent steps depend solely on the data collected during this step. Hence, it is very much imperative that the gathered data is accurate.
However, it is easier said than done since it involves collaborating with other departments. In the case of MNCs with a huge number of employees, it becomes a daunting task and this is where a dedicated payroll software helps a lot. It would be ideal to have an HRMS in these situations as it would have attendance and payroll as modules and hence, there would not be a need to pester anyone for the data. Having dedicated software also helps in avoiding data inconsistency as well as removing any errors.
Various parameters need to be collected for arriving at the payroll amount. Some of them are:
– Attendance data such as working hours, overtime, leaves, etc.
– Payroll deductions such as loan EMIs, recoveries, etc.
– Additional pay such as overtime payment, reimbursements, etc,
– Investment declarations
– Tax regime which individual employee falls under
– Previous month arrears
– Salary revisions, if any.
Once the data is collected, one needs to ensure that it is precise and devoid of any kind of errors. It also needs to be verified by cross-checking it with the statutory policies and the supporting documents, such as reimbursement proofs, investment declarations, etc.
Similarly, while verifying the data, it is required to take into account the newly joined staff members as well as those that are leaving the organization. One needs to adjust the payment details accordingly and ensure that both of these kinds of staff are being paid accurately with all the required components.
The future of payroll can be summed up in two words: flexibility and scalability. Due to the growing diverse nature of the workforce, the percentage of contract and gig workers have increased, and the resulting changes need to be reflected by the payroll system accordingly.
Paying the employees based on their preference, such as hourly, weekly, or monthly, will become imperative since the current form of monthly payments is relevant only for full-time employees. On the other hand, gig workers can be paid by projects undertaken, their contract duration or based on the efficiency of their work.
Additionally, AI and Machine Learning will be used extensively in payroll software to improve the automation abilities of such systems and streamline the workflows to provide efficient output. AI would also offer predictive analysis and ensure any issues are avoided before their occurrence.
Security will also be a significant challenge with the added usage of software and internet connectivity in payroll systems. Secure usage access and biometric passwords seem to be the future of employee payroll software, as many individuals are working in hybrid and remote office setups.
Payroll and HRMS software has become a necessity in the modern age. Hence, companies of all sizes have started deploying an HR and payroll system to stay competitive in the digital world. Even if you are a start-up, you need to deploy a payroll software that provides accurate salary payment for each employee per month. They will also develop trust in your business and remain engaged for longer if you disburse their salaries on time.
Deploying payroll software is one of the options of staying updated with the latest statutory changes. We will keep the software updated with the latest regulatory changes so you can avoid hefty statutory fines, which will be catastrophic for functioning of a start-up. The employees of your business can be happier with a dedicated employee self-service portal that helps them download their payslips each salary cycle. It will also help them learn more about their payroll and related information.
Irrespective of the company’s size, full-service payroll processing consumes a lot of valuable time. It includes processing massive data such as your employees’ attendance, working hours, various benefits they receive and taxes related to the various payroll components. Additionally, the HRs spend a significant amount of time and effort in cross-verifying the details to ensure the accuracy and integrity of data, even for small business.
Automated Payroll will be able to take care of these with precision and efficiency so that you can allocate other tasks to the HR department. Dedicated payroll systems also help in ensuring that you comply with the latest regulatory laws, thereby avoiding the need to manually update the system for new changes. Since Payroll is an essential part of any company, dedicated human resources and payroll software can easily automate it for you.
The New Wage Code is an attempt to simplify the regulation of wages and extend security to the people working in the unorganised sectors. Following are some of the significant reforms:
Changes in Basic Salary per month Your basic salary cannot be less than 50% of your CTC. Since most employees have basic salaries with less than 50% of CTC, their salary structure will be revised to comply with the new regulations.
To increase employees’ basic salary to 50%, companies will have to decrease the number of allowances provided. Hence, it will result in a lower in-hand salary.
Since PF is 12% of the basic salary, it will increase when the New Wage Code is implemented. It ensures that the employees will have a higher pension and PF amounts on their retirement.
Under the New Wage Code, employees who have worked for your company for one year are now entitled to receive gratuity instead of the current mandate of 5 years.
What is payroll?
In simple words, payroll is any process of providing salary to employees and wages to part-timers based on their worked hours and decided pay. This is not so simple. Calculation of final pay to be paid requires several other calculations and data like leaves taken, remaining PLs, LOP, loan, compensations, appraisal, withholdings, etc.
Payroll involves the process to provide pay to your employees by the employer on agreed terms. There are 2 basic categories into pay:
Net pay is the actual amount received by the employee after all deductions are made into gross pay.
Net pat = Gross Salary – Deductions
Steps included in the payroll management process:
A payroll manager needs to be attentive during the payroll management process. It requires proper planning and assistance to effectively perform without any error. There are always ongoing tasks, which need constant attention to everchanging amendments and withholdings. To learn easily, we have segregated the entire process into 4 major categories as below:
1) Gathering employee information
-Addressing working policies and overtime rules
-Attendance management software
2) Withholdings and Taxes
-Net pay calculation
4) Tax filing & Reporting
What is payroll management system?
Payroll software helps with payroll processing of the entire workforce in seconds. Yes, you heard it right. Payroll management software is capable of tracking and recordkeeping payroll and employee parameters like employee leaves, tax deductions, ESI calculation, etc.
From calculating the precise payroll amount to managing taxes, a payroll solution could help businesses function smoothly.
Also, the software generates payslips and important reports at a click. Employees can upload, access, and edit their personal details on the employee service i.e. ESS portal from their smartphones on the go. Also employees can apply leaves, salary details, and deductions when needed through their service portal.
4 Benefits of having a payroll management system
1. East detailed reporting
2. Time savior
3. Online payroll software
4. Compliance management
Easy detailed reporting
A good payroll system will facilitate this process seamlessly. This can be extremely valuable when you are looking to retrieve information for any queries related to these matters. The payroll software allows you to generate accurate payroll reports like monthly payslips or leave report of any employee.
Since everything in a payroll management system is automated, you will be saving a lot of time. You don’t have to manually enter the information for every cycle. You set it up once and let the software handle the rest. The only thing you will probably do is new employee registration for every new hire.
Online payroll software
The online functionality of a cloud-based payroll system makes it an easy pick for any business. Instances like remote working bring challenges like remote workforce management and online payroll. A payroll software, whereas allows the HR manager to digitally collect the hour details of employees and keep the right data for payroll. Online payroll software promotes flexible working and easy management.
This refers to the legal framework your business must adhere to. As an employer, you are required to maintain various payroll and payment records of your employees. Every organization that hires employees and pays salaries must comply with the labor laws. By having a payroll process in place, you are automatically complying with the employment and labor laws in India.
Information is the key. The HRMS solution with an inbuilt payroll management system could bring the much-needed wave at the firm. No one knows your business better than you. Know the requirement and choose the right HR management solution for streamlined processes and cost-saving.