7 Common Misconceptions About Payroll
The payroll process is a crucial chunk of all businesses. Your business may be minting money or just making ends meet. Yet the payroll process is one that is up and running all time, no matter what. It is mandatory that all your employees are paid right and also at the right time. Payroll data is extremely sensitive and it is indeed necessary of knowing all about it. This compulsion makes it easier for wrong facts to be spread and accepted. ‘How well do you know your payroll software?’ is sure to make many eyes roll.
Here are 7 most common misconceptions about payroll that can trap you and ruin your business :
Myth # 1 : Setting up a payroll is a one-time process
Once your payroll software is up and going, doesn’t mean that everything is under control. A payroll process is one that needs continuous evaluation and periodic updation of software.
- Eliminate repetitive, often accuracy prone, tasks such as data-entry and reentry and also the errors associated with manual calculations using a reliable payroll software.
- Frequently audit your payroll software and process for a hassle free data.
Myth # 2 : Payroll means only salary calculation
This is a very common and widespread myth about payroll. Payroll can be coined as a necessary workplace function for employees to receive their earned compensation.
- Payroll is an administrative function that involves both human resources and accounting procedures.
- Your payroll process combines Time & Attendance, Salary Calculation based on Leave policy, deducting TDS, deducting statutory PF, ESI, PT, Labour welfare fund, reimbursements, incentives, bonus & other items as applicable
- While Salary calculation norms are based on your company policy, the rest deductions are subjected to a variety of central / state and local rules and regulations.
Hence payroll is and can never be confined to only salary calculation.
Myth # 3 : Payroll can be processed by anyone who belongs to the HR or Finance function
The process of payroll handles large volumes of employee’s confidential financial data. Hence the task of assigning your company’s payroll in safe hands is important.
- First perform a thorough background check on your potential payroll employee. This is assuming they have the necessary functional and behavioral skill to perform all activities related to payroll including taxation & statutory aspects.
- Once you have selected your choice, request them to sign a confidentiality agreement that prevents them from leaking payroll data at any cost. A data breach, whether intentional or otherwise, can lead to many indirect costs such as competitor knowing your salaries, etc.
- If your payroll employee, dealing with sensitive data are terminated, remember to change all codes, passwords and clean all payroll information from their system.
Myth # 4 : Payroll function does not involve employee taxes
The process of payroll is not independent of employee taxes. India require employers to withhold payroll taxes from their employees’ gross salaries.
- All tax withholdings calculations and deductions to be paid to the Government on behalf of the employees is done by the payroll team.
- Tax withholding calculation is to be done separately for each employee based on their personal exemptions & deductions.
Myth # 5 : Payroll function is only transactional
Processing payroll for employees is the prime task of your payroll department. It does not imply that this payroll process consists of only transactions. What else goes behind your payroll processing? Some of the Strategic activities are below :
- Reviewing your payroll components and ensuring they align with your industry, competition & peers to ensure Talent is retained.
- Ensuring your Payrolls enable you to grow to the next level inline with your organization’s goals
Myth # 6 : Payroll function does not enhance employee experience
One of the biggest responsibilities of payroll is to enhance employee experience. This is directly linked to productivity, happiness, good-will for the company and retention.
- Timely, accurate salary payments and pay-slip issuance reinforces organizational confidence to the employees, makes them credit-worthy.
- Having an Employee Self Service portal reduces lots of manual Q&A and provides better access to data and creates a culture of transparency.
Myth # 7 : Inhouse payroll is easier and cheaper than Outsourced payrolls
This is a common debate when it comes to payroll. Running your payroll inhouse means :
- You need to upgrade and pay maintenance on your payroll software
- You need IT support to handle your in-house payroll
- You need your own IT hardware like printers, PC’s, IT support time etc.
- Staff costs to be addressed : training, time spent on administration and payroll filing, recruitment costs
- Compliance with government regulations and expertise of your professionals
- Efficient backup of payroll at all times
- The constant worry of your payroll expertise leaving you
Processing your company’s payroll is neither a cakewalk nor cheap. Be aware that your time saved in mending unstable payroll systems is actually money saved.
‘Time flies, but you are the pilot’. Your payroll system can either be on a roll or take a toll on you. The choice is all yours – You can save time, focus more on your revenue generating activities by outsourcing your payroll system or you can lose time and money handling insecure payroll systems. With constantly changing regulations and withholding rates, a sound expertise in payroll is the need of the hour.
At Relativity, we process about 64,000 employees payroll data monthly with 100% accuracy and compliance, assuring timely delivery with exceptional speed and excellence. Payroll processing is no more a concern of worry when it is done by the experts 🙂 🙂