Most companies, especially large-scale ones, recruit staff for their system to run successfully and efficiently. Making the salary payments, managing and handling human resources (HR) records is an important thing here as it exerts pressure on the economical aspects if not dealt with properly. All these things are an integral part of the payroll preparation process and need extreme accuracy.
For the preparation of faultless, accurate, and correct payroll, the employee deployed for it must be experienced and well-versed with the system. Payroll is an important and big section of the accounts and financial management in the business and plays an important role in its success. The use of payroll software for accountants can also be implemented.
While preparing the payroll, or to understand this account following elements must be noted that is much important for its correctness.
Staff Attendance account
Calculation of exact amounts to be paid to the employees in the account of salaries is very important and needs detailed working. Staff attendance is maintained on a daily basis, and that is considered while preparing the salaries. The number of days worked in a month is a factor that concludes the salary amounts. The accountant must check the paid/sanctioned leaves availed record, and should be deducted if exceeded than the authorized quantity. Similarly, absents are also counted towards the deduction wages.
Employers must pay different pay rates to different employees depending on the nature of work, experience, seniority, etc. So, while preparing the payroll you must apply and verify the correct pay rates otherwise you would be facing errors in the end, and even disturbance in the final accounts eventually.
Calculation of Allowances
Some additional allowances are also granted to the employees i.e., conveyance allowance, house rent, utility allowance, medical facility, children academics fees, etc. So, while preparing the payroll, you must ensure the proper and accurate treatment of these allowances so as to facilitate the employees and errorless maintenance of business accounts as well. Sometimes there are annual or business success bonuses that must be incorporated carefully in the payroll.
Calculation of Deductions
There are always specific deductions in the salary payments whether they are charged as penalties or retirement incentives. Deductions could be contributory funds in the account of Provident fund, health insurance, and gratuity, etc. You must calculate the deduction carefully and in accordance with the prevailing rates or set amounts. Mistakes in calculations of these deductions can affect and disturb the payroll.
Comparison and Justification of Difference with the Previous Payroll
One of the most effective ways to check the correctness of payroll is by comparing it with the previous one and preparing a justification statement of the difference being appeared. It helps to trace out the error and rectify it. This approach seems very casual and new accountants often ignore it because of unawareness of benefits, but the experienced one is much acknowledged of this attempt. You become able to examine and re-evaluate each and every payroll change that not only traces out errors but also creates an opportunity to review your work.
Business Policies treatment
While preparing payroll, you must comply with all the business policies drafted for the payroll. There are certain conditions that are set to manage HR matters and their salaries issues. So, treatment of these policies is very important to avoid any audit objection later on. These policies could be concerned with the change of pay rates, salary increments, and allowance payment conditions, etc.
Salary Receipts check
Mostly, the salaries are paid via bank accounts to keep an authentic record of receiving. Be careful while incorporating employee’s account numbers in it to ensure the convenient disbursement of salaries. Sometimes, cash payments are also made, so you must have a receiving note at the end. All the arrangements will protect you from any kind of controversy later on.
It can be tough to manage these elements manually. There are risks of mistakes being made, which can prove to be quite costly in the long run. This is where a payroll software programcomes into the picture. It is a specialized program that can help streamline the entire payroll system of your business. However, make sure to choose the best payroll software solution, such as Netchex, if you want the best results.