Keeping records of salary paid in cash requires a systematic approach to ensure transparency, compliance with labor laws, and easy auditability. Here are best practices for maintaining proper records:
1. Maintain a Salary Register (Manual or Digital)
Use a physical ledger book or a digital spreadsheet (Excel/Google Sheets) to maintain records.
Each entry should include:
Employee Name
Employee ID
Designation/Department
Salary Amount
Deductions (if any)
Net Amount Paid
Payment Date
Employee Signature/Thumb Impression (for acknowledgment)
2. Prepare Salary Slips
Issue a salary slip to each employee every month.
Include:
Gross Salary
Deductions (PF, ESI, Loans, Advances)
Net Salary Paid in Cash
Payment Date
Employer Signature (Optional)
3. Get Employee Acknowledgment
Maintain an Employee Salary Acknowledgment Register.
Ensure that employees sign against their names after receiving their salaries.
If employees are illiterate, obtain a thumb impression in the register.
4. Use Payment Vouchers
Create salary payment vouchers for every cash payment.
Each voucher should have:
Employee’s details
Month of salary
Salary amount paid
Payment date
Signature of both the employee & employer
5. Segregate Cash Payments in Accounting Books
Record salary payments separately in accounting software or manual ledgers.
Mark each salary entry as "Paid in Cash" to differentiate from bank transfers.
Keep track of the cash balance available to ensure accurate bookkeeping.
6. Ensure Compliance with Tax & Labor Laws
Verify if any government regulations restrict cash salary payments beyond a certain limit.
Maintain necessary tax deductions (TDS, PF, ESI) and report to authorities.
If salary is above the legal threshold (e.g., ₹20,000 in India), it’s recommended to pay via bank transfer to avoid tax scrutiny.
7. Conduct Periodic Audits
Conduct internal audits to cross-check cash salary records.
Reconcile the cash withdrawals from the company’s account with salary disbursed.
From India, Gurugram
121. Maintain a Salary Register (Manual or Digital)
Use a physical ledger book or a digital spreadsheet (Excel/Google Sheets) to maintain records.
Each entry should include:
Employee Name
Employee ID
Designation/Department
Salary Amount
Deductions (if any)
Net Amount Paid
Payment Date
Employee Signature/Thumb Impression (for acknowledgment)
2. Prepare Salary Slips
Issue a salary slip to each employee every month.
Include:
Gross Salary
Deductions (PF, ESI, Loans, Advances)
Net Salary Paid in Cash
Payment Date
Employer Signature (Optional)
3. Get Employee Acknowledgment
Maintain an Employee Salary Acknowledgment Register.
Ensure that employees sign against their names after receiving their salaries.
If employees are illiterate, obtain a thumb impression in the register.
4. Use Payment Vouchers
Create salary payment vouchers for every cash payment.
Each voucher should have:
Employee’s details
Month of salary
Salary amount paid
Payment date
Signature of both the employee & employer
5. Segregate Cash Payments in Accounting Books
Record salary payments separately in accounting software or manual ledgers.
Mark each salary entry as "Paid in Cash" to differentiate from bank transfers.
Keep track of the cash balance available to ensure accurate bookkeeping.
6. Ensure Compliance with Tax & Labor Laws
Verify if any government regulations restrict cash salary payments beyond a certain limit.
Maintain necessary tax deductions (TDS, PF, ESI) and report to authorities.
If salary is above the legal threshold (e.g., ₹20,000 in India), it’s recommended to pay via bank transfer to avoid tax scrutiny.
7. Conduct Periodic Audits
Conduct internal audits to cross-check cash salary records.
Reconcile the cash withdrawals from the company’s account with salary disbursed.
From India, Gurugram
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