Payroll processing is an important business function that includes settling of net pay to workers after adjusting the appropriate taxes and other deductions.
It consists of the procedures taken to pay workers for each period and includes monitoring of working hours, deductions on employees’ compensation, and the remittance of payroll taxes. Creating a sound payroll process can help employees avoid fines for violating labor laws.
Some of the challenges faced in payroll processing are:
- Statutory Compliances: Businesses in India have to abide by the legal structure when paying salaries to their staff. This structure consists of four components:
- TDS (Tax Deducted at Source) – Employers deduct their employees’ taxes and remit them to the government. This tax is applicable when employees’ salary exceeds the basic limit.
- PF (Provident Fund) – Contribution by employees and employers to the Employee Provident Fund scheme in fair proportion. Its aim is to provide employees with lump-sum compensation when they leave their employment.
- ESI (Employees State Insurance) – Certain amount is deducted from employees in order to provide medical costs which include accidents and maternity.
- PT (Professional Tax) – Tax levied by respective State Governments on all kinds of professions, traders, and employment. This is deducted from employees.
Failure to comply with these statutory laws can result in penalties and fines being imposed and may also destroy the reputation of the business and its existence.
The most efficient way to be compliant is to opt for advanced payroll software that automatically processes payroll in compliance with statutory legislation.
- Manual payroll process complications: Businesses in India still continue to be dependent on papers or spreadsheet-based payroll processing. Though no initial investment is required for manual installation, computations using spreadsheets and manual processes are time-consuming, lengthy, and tedious.
These sheets do not have the requisite potential to comply with tax regulations on a monthly basis. The easiest way to save time and not get flustered with payroll processing information is to use an automated payroll solution for streamlined payroll management and processing.
- Data Security concerns: Protection of data is a major obstacle while storing sensitive employee details in tedious spreadsheets. Data manipulation can be committed in various ways like fake salaries and commissions, having fake employees, and misusing insurance claims. This increases the risk of data mishandling and information leakage.
Using a robust payroll solution with compliance audits on a recurring basis and regular database inspections are some ways to resolve this problem.
- Relying on multiple payroll data sources: Another common issue in payroll management is relying on multiple payroll applications. The software used to store employee data is entirely different from the software used to monitor left, productivity, or employee benefits.
Opting for a solution that can integrate all the above components will not only make it easier to manage the entire process but also eliminates the maximum hours spent on adding, collecting, and monitoring data. Hence allows businesses to become more productive and economical in the long-term.
- Errors in Time and Attendance: Time and Attendance play a very crucial role in the payroll process. Thus Payroll and Time & Attendance go hand in hand. It leads to blunders if there are any time and attendance related errors and miscalculations like Overtime calculation errors, late payouts, daily attendance, leaves and holidays not reported, etc.
Thus, it is highly essential to regularly monitor time & attendance with the incorporation of salary schedules to get accuracy in the payroll process.
- Increase in payroll team burden: Manual and inefficient payroll solutions make staff consume most of their hours performing routine, repetitive, and monotonous tasks over and over again, affecting their overall productivity.
The solution to fix this is automating the payroll solution. Using advanced payroll software, you can easily solve all of these concerns and improve the efficiency of your business.
When it comes to addressing the challenges of payroll processing, using robust payroll software that is in compliance with all the state and local regulations, easy to configure, comprehensive, glitch-free, avoids dependency on spreadsheets, automates tedious tasks, and streamlines complex tasks so that the teams can concentrate on what counts the most is the perfect solution that businesses can have.
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