How Does Payroll Processing Work for Companies with Over 50 Employees?

Can anyone explain in detail how the payroll processing is done in a company having 50+ employees.

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Certainly! Payroll processing in a company with 50+ employees typically involves several steps. First, the HR department collects and verifies employee work hours, overtime, bonuses, and any other relevant information. This data is then entered into the payroll system, where taxes, deductions, and benefits are calculated. Once the payroll is processed, employees receive their salaries through direct deposit or checks. Additionally, payroll must comply with legal regulations and ensure accurate record-keeping for tax purposes. Overall, payroll processing for a company of this size requires attention to detail, accuracy, and adherence to deadlines.

Hi, Prema Latha,

The Payroll Processing will be easy if you maintain a complete EMPLOYEE DATABASE working in your organization.

Employee Codes help you in sorting the problems.

For 50+ employees, Payroll Processing can be done on an Excel sheet.

The sheet should contain the basic information of the employees like Employee code, Employee Name, Designation, Department/Section, Date of Joining, Date of Birth, PF No, ESI No, Father Name.

Total days for the month, Days to pay DTP (worked days for the month including leaves & W/O):

[DTP = (Physical Working Days + Paid Leaves (CL, SL, EL) + Paid Holidays + W/O + Compensatory Offs) - (Loss of Pay + Unauthorised Absence)]

Salary Details: Gross Salary, Basic, HRA, Conveyance, DA, FDA, VDA, Total Salary, Basic earned, HRA earned, Conveyance earned, DA earned, FDA earned, VDA earned, total salary earned.

Other Pays: Overtime pay, incentive pay, etc.

Supplementary pay, arrear pay.

Deductions: PF ded, ESI ded, deductions for late comings / early goings, etc.

The Gross salary earned for the month + other pays = Total earnings of the employee.

The total earnings of the employee - Total deductions = NET SALARY OF THE EMPLOYEE FOR THE MONTH

I hope I haven't missed anything.

If I have missed anything, please let me know.

Bye...

Sindhu

Hi,

You all are almost right, except for income tax calculation and working. You have to work with whose gross salary is above 12500 (PM) or 150000/- PA. Then you have to start thinking about income tax calculation, either on a monthly basis or from January, February, March alone.

You have to start calculating the taxable income of the employee/staff and deduct the amount as per your calculation. If you do not deduct the income tax (TDS) on your staff/employee, that expense (salary) cannot be claimed under the P&L account for that year.

Regards,
Kugan Paramasivam.

Hi Prema,

This is Mamatha from Bangalore. I have one format, but you still need to work on that format as you have to update it with income tax details. Just check the attached document. I hope it might give you an idea.

Regards,
Mamatha

Hi Premalatha,

Sindhu has covered most of the components required for processing payroll, but every December a "Labour Welfare Fund" needs to be deducted from the employees eligible for it. Most of us ignore this as we would have configured this in the payroll software which automatically takes care of this deduction. The payroll software will help us in verifying the payroll process done is correct by generating the Delta Report. Most of the Statutory reports of PF, ESI, PT, and IT will also be covered. This helps us to reduce our time spent on salary process work.

Thanks,
Srinivas

Hi HR professionals,

If you are computer savvy and smart enough, have patience, and are willing to learn, you can work in MS Access and export data to Excel. Has anyone tried it? If not, you should give it a try and seize the opportunity to learn MS Access.

Hi Everybody,

Please guide me, is there any hard and fast rule in any law regarding the heads in the salary, i.e. salary breakup should be in a certain percentage in each head, or can we distribute the gross salary under various heads as per our convenience? Because presently, we are distributing the salary in the following way:

Basic: 70%
HRA: 12%
CCA: 15%
Spl. Allowance: 3%
----------------------
Total (Gross): 100%
Less: PF (12% of Basic)
Less: ESI (1.75% of Total Gross)
Less: TDS wherever applicable

Is this format fine? Or is there any legal/approved format for salary distribution?

Regards,
Kapil

Payroll processing is normally a technical job requiring knowledge of various laws related to PF, ESIC, IT, Bonus, etc. However, it is simple to understand and then practice. Please consult with any professional agency that deals with payroll processing.

Regards,
Rajpal

Bifurcation of CTC is dependent on the company's policy, which may differ from company to company, whereas PF, ESIC, etc., are statutory deductions and are standard for each company.

Hope this information gives you some insight.

Regards,
Rajpal

Dear All,

I need to understand who is responsible for Payroll processing - Accounts or HR. What part is handled by Accounts and HR. Attaching herewith the format where I would request to provide the information.

Thanks,
Sarika

Mamatha,

Very good format.

This is Mamatha from Bangalore. I have one format. But you still need to work on it as you have to update it with income tax details. Just check the attached document. Hope it might give you an idea.

Regards,
Mamatha

Hi friends,

I am a new member of this site. I find it very informative. Hats off to the creators of this idea.

Can anyone tell me if there is any change in the calculation of salary with respect to the contributions towards PF and ESI from both the employee and the employer?

Thanks,
Suresh

Manoranjan, you are right. Please consider adding some other components to the salary structure, such as:

- Basic = 50% or 40% of the gross salary
- HRA = 40% or 50% of the basic salary (depending on Metro and non-metro locations)
- CCA = 20% of Basic
- Medical = Rs 1250/- per month
- Children's Education = Rs 100/- per month (Rs 1200/- per annum)
- Bonus = 8.33% of the basic salary typically (varies by company)
- PF = 12% of the basic salary
- ESI = depending on the gross salary (if applicable)
- Telephone expenses = Rs 750/- per month

Other components like Traveling Allowances, Food Allowance, Petrol Allowances, etc., are entirely at the discretion of the company.

Feel free to design the salary structure as mentioned above for better understanding.

Best regards,
Manoranjan

Sindhu,

You shared food info, but some companies are deducting Mediclaim from salary every month. Vijay

The Payroll Processing will be easy if you maintain a complete EMPLOYEE DATABASE working in your organization. Employee Codes help you in sorting the problems. For 50+ employees, Payroll Processing can be done on an Excel sheet.

The sheet should contain the basic information of the employees like Employee code, Employee Name, Designation, Department/Section, Date of Joining, Date of Birth, PF No, ESI No, Father Name.

Total days for the month, Days to pay DTP (worked days for the month including leaves & W/O)
DTP = (Physical Working Days + Paid Leaves (CL, SL, EL) + Paid Holidays + W/O + Compensatory Offs) - (Loss of Pay + Unauthorised Absence)

Salary Details: Gross Salary, Basic, HRA, conveyance, DA, FDA, VDA, Total Salary, Basic earned, HRA earned, Conveyance earned, DA earned, FDA earned, VDA earned, total salary earned.

Other Pays: Overtime pay, incentive pay, etc.

Supplementary pay, arrear pay

Deductions: PF ded, ESI ded, deductions for late comings/early goings, etc.

The Gross salary earned for the month + other pays = Total earnings of the employee

The total earnings of the employee - Total deductions = NET SALARY OF THE EMPLOYEE FOR THE MONTH

I hope I haven't missed anything.

If I have missed anything, please let me know.

Bye...
Sindhu

What do you mean by FDA, VDA, Basic earned, HRA earned, Conveyance earned, DA earned, FDA earned, VDA earned, total salary earned? For example, can you tell the difference between FDA and FDA earned?

Suresh M.G

Hi All, thank you, everyone! This information is very useful for me to understand what payroll processing entails. Could you please advise me on the forms that need to be maintained for employees in relation to statutory compliance?

Regards, Malathi