The startup and business communities in India have been expanding on a large scale. With growing companies comes a lot of responsibilities and duties for the entrepreneur towards their employees. Rigidness in carrying out the accounting activities can have a negative impact on your organization in the long run.
Therefore, one of the most important functions to carry out in any organization and to ensure a smooth sailing business is paying their employees on time.
Startup & SME still have manual payroll because of the low count of employees. But it’s practically impossible and broadly time-consuming to calculate payroll manually in a medium or large organization. This is why we have a solution called payroll services in India at your disposal that plays a major role.
As though payroll wasn’t already hard, with the digitization of every transaction and the complexities of its accounting, it must now be calculated keeping in mind all taxes and deductions.
A recent survey has shown that the human resource department spends 25% of its time recording data or carrying out the auditing processes or tax reports. With so much manpower being invested in such manual tasks, imagine what benefits your organization will reap if they started outsourcing these tasks instead.
Therefore, having an error-free payroll process at your disposal is very crucial for your business productivity. The features of payroll are abundant but you need to find efficient payroll solution providers for your company.
Outsourcing your payroll will help you as an employer have time on your hands to focus on the core activities of your business.
Hence, Cloud-based payroll solutions will make the prospect of accounting very convenient for you!
If you have employees, you have payroll activity as a part of your everyday life. Since it plays a major role in any organization, there are some common issues that arise because of it.
So what are the common problems in payroll and how should you get rid of them?
This blog will talk about the common problems of payroll and its solutions
Let's discuss some of the problems that are associated with it
1. Misclassification of the Employees
Many times you may make a mistake in the classification of employees. If your company works with both independent contractors and employees, you should classify them beforehand because they are not treated the same when it comes to payroll.
Your organization can be subjected to fines and other related issues if employees are not properly classified.
2. Time cards are not checked
In a hurry to meet the deadlines of payroll, employees sometimes make errors in timecards. Because of the mistakes in the timesheet, either the employees don't get paid or they are overpaid.
In one case, the organization suffers a loss, and the other results in the employees losing faith and trust in the company. Human resource management in such cases becomes a very hard task! Therefore it is necessary for HR's to build better employee relationship.
3. Managing absence
One of the most crucial pain points of managing payroll is employee attendance.
You need to keep a check on the attendance of an employee for a particular month so that an updated sheet with the attendance records can be given to the payroll specialist for calculating remuneration.
A failure to update the attendance records can delay the whole process.
4. Late Payments
Payroll processes that cause delays in the payment to employees are a straight NO! Prompt employee salary payment is very important otherwise it leads to payroll stress and frustrated employees not working to their maximum potential
If in-house is causing hurdles for you, your best option is to outsource your processes to cloud-based software providers that can manage your payroll efficiently for you.
5. Changes in Regulation
There are constant changes in the laws and regulations concerned with running an organization. Keeping a track of such regulations can be a tough task.
This is the point where your merchants come into the picture. They will keep track of the latest changes in the regulations, follow the statutory compliances and manage employee tax obligations
6. Errors in Calculation
You need to make sure that there are no delayed payments until the end of the annual year.
In such cases, a self-audit or an internal audit to ensure that your organization is free of even the minutest errors.
7. Tax compliance
Tax filing is compulsory under the Companies Act, 2013, and other related regulatory compliances. A major payroll issue is following these regulations and not having to pay penalties.
If you have already been a victim of such, a 2021 year lesson for you:
Here is a guide on how you can choose an efficient Payroll Services Provider:
When you say ‘payroll’, it doesn’t just mean paying wages to employees or calculating the overtime hours. There’s an entire process that takes place behind the scenes before you get to that point.
Everyday shuffling of the excel sheets, adhering to the various laws such as PF or ESIC, etc might be a challenge for you. While it may be difficult to carry out the operation on your own, access to payroll software with payroll service providers will make your life easier.
By taking the control of the payroll functions yourself and not outsourcing it might be cost-effective for your business, but this action increases the chances of human errors and the span of time it requires is exhausting. Wrong calculations of salaries or delay in the monthly payment may also reduce the morale of the employees in your business.
To prevent such activities from happening, here is a list of functions that payroll service providers in India would take care of:
1) Data Management:
Importing data from old excel sheets is as simple as copy-pasting a Wikipedia description to your essay assignment. Simply click a button and our software will import all your data in one go ensuring improved efficiency.
Data of various clients are stored in one place ensuring that client requirements are fulfilled, security and privacy are maintained, consolidated reports drafted earlier are easily accessible, etc all leading to client satisfaction.
The payroll processing system also makes it possible for you to see the track record of previously stored data at a later date in a spreadsheet, that too is only a mouse-click away. There are also various request that your employees
2) Monthly Salary and CTC:
Payroll calculations enable you to create multiple salary structures based on varied seniority levels and according to different time periods for which an employee is/has been working.
Accurate payroll processing plays a major role in this function. Once the customized parameters are set and salary slabs are created, they can easily be allotted to employees, old or new, making employee payment management easier for you.
To further decrease your hassles, sumHR automatically sends salary slips to employees via email every month. sumHR salary management system also automatically calculates all deductions/allowances for the final CTC.
3) IT and Deductions:
You might not be familiar with the latest tax updates but the experts at sumHR are always updated with the latest IT policies and statutory changes made by the government to certify efficient payroll.
We will automatically update them for your accounting purpose so you don’t have to worry about legal implications arising due to un-updated policies within your business operations.
If your company has branches in different countries, the problem of changing the policies is tedious. So in such a situation, opting for payroll processing services can be helpful.
Based on every employee’s CTC, we calculate TDS estimations, IT projections, gratuity, and generate TDS challans. We also provide statutory reports for forms for Q-24 and 12BA, so you can forget about all these names and leave them to us and
4) PF and ESIC:
Provident funds are a basic need in every organization, even when running payroll processes for small businesses with a payroll management team. Lucky for you, sumHR comes preset with standard PF and ESIC rates that are also editable for every employee for your internal payroll.
PF challans and ESIC challans are auto-generated every month and we also provide annual reports for both giving your organization a perfect solution.
5) Profession Tax and LWF:
We know our customer base is spread out throughout the country. Every state has its own PT slab and some organizations have their employees across multiple states.
Managing professional tax slabs for employees in different states can get hard, and that’s why our software comes preset with PT slabs for every state.
Just like PT slabs, the labour welfare fund slabs also differ state-wise. LWF slabs are also preset in sumHR, and we provide challans for both.
6) Loans and Bonus:
Giving bonuses over and above the minimum wages to employees annually is a great way for employee retention and to appreciate the efficiency of employees within your business organization.
But the backend process of using the valuable time to calculate the cost of it and making separate records for salary slips is a headache for the business owners. The same goes for loans given as advance.
sumHR'S wide range of Payroll services calculates bonuses to be given based on every employee’s CTC and generates separate salary slabs for the same.
Our loan management feature also handles accounting and prepares your Loan Ledger, Balance Summary, and Monthly Recovery Report.
7) MIS Reports and Asset Management:
Creating reports for crucial analysis of employee records or recording the employee attendance is a usual routine that takes up days at the end of the month. To completely eliminate this entire process, sumHR offers automated reports for every possible thing.
The features we cover are increment analysis to track employee growth charts, comparison charts, monthly registers for payroll data, loan registers, and employee turnover and CTC reports.
We also solve all your asset management troubles with powerful tools to track all company assets including details like what is assigned to whom.
8) FnF Settlement:
On beginning the full & final settlement process for any employee leaving the organization, sumHR automatically starts generating important payroll figures.
Detailed information like payables against salary, yearly bonus, LTA, medical, gratuity, leave, etc. is made available immediately.
sumHR’s payroll process for medium-sized businesses also takes care of any recoveries to be made in terms of assets or loans.
Now that all of the above are taken care of by us, all you need to do is click a button to process the payroll.
So let's get started. If you have any questions leave it down in the comments below and I will be sure to answer it.
Frequently Asked Questions (F.A.Q)
1) What are the benefits of payroll outsourcing services?
- SAVE TIME-
It's not a cakewalk to manage payroll systems. A lot of functions are involved in its management such as quarterly returns, consolidated reports, accurate tax returns, tax deductions during payment of wages to name a few. Outsourcing the accounting to a service provider unburdens you from these time-consuming tasks ensuring 100% accuracy as well.
- INCREASE IN SECURITY-
Theft of sensitive information is a big risk that we all deal with in our day-to-day lives. It, therefore, requires extensive monitoring. Which is why service providers have all the security measure you need 24*7 to keep your information safe and secure.
- TEAM OF PROFESSIONAL EXPERTS-
Being up to date on the changing norms of government regulations is a big factor to avoid any errors. For this, a team of experts in accounting processes can help in accurate benefits and deductions in the payroll system.
2. What is the cost of payroll outsourcing companies?
The direct costs of payroll outsourcing companies depend on the budget you have and the requirements for which you need the service. payroll services providers often provide a lot of features that you need to customize for your business and accordingly the costs are fixed.
A recent survey has shown that mid-size organizations (those who have 100-1000 employees) have cost savings of 9% through online payroll services and larger organizations (1000+ employees) have saved a total of 27% of their annual costs.
3) What are the basic payroll practices that a company should follow?
Here is a list of payroll practices that you can follow in your organizations for smooth functioning:
- EMPLOYEES SHOULD BE PROPERLY CLASSIFIED - Misclassifying employees can subject your company to serious tax-related issues with the IRS. State-level research shows that 10% - 12% of the companies do not properly classify their employees impacting the company's revenue.
- TRACKING OF DATES AND DEADLINES- The department of labour has strict regulations for submissions of payroll documents. Heavy fines are charged with the submissions are not on time. That is when outsourcing the services comes in handy.
4As a business owner, are there aspects of these that you still struggle with? Are you still struggling with finding the best service provider for such processes for your company? If you are nodding yes and have a need to resolve these problems, then head over to sumHR, be the HR her with our payroll software.