payroll management services
The payroll management service, in a nutshell, compares to the process of administration of a company’s employee’s financial records. This would involve details of the employee’s pays, incentives, rewards, deductions, and net income.
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PAYROLL MAINTENANCE SERVICE - an overview
Payroll process covers and maintains employee’s financial reports concerning their salaries, wages, tax deductions, net pay, incentives, and other statutory requirements like ESI (Employees’ State Insurance) and PF (Provident Fund). An efficient payroll administration policy guarantees timely payment of salaries to employees, which states the healthy financial stability of the company, giving no place for legal implications, which will maintain good morale in the company! A payroll management services system is necessary for every organization alike. For every business, be it a startup, medium-sized, or large-scale, maintaining a healthy payroll system is very necessary.
ADVANTAGES OF PAYROLL MANAGEMENT SYSTEM
An adequate payroll method includes a sound system that goes obedient with payroll laws and labor laws hand in hand. Given are some advantages of a good Payroll Management system:
Convenient Tax Filing And Reports:
According to the Income Tax Act, every salaried individual is obliged to pay taxes as directed by the State and Central governments, depending on the salary and exemption limit. In case of any mismanagement of taxes, which results in workers paying penalties and to avoid such mismanagement in systems a proper payroll software plays a vital role. Which further manages all the compliance and lawful requirements, which assists the company in filing taxes smoothly.
Highly Cost-Effective And Time-Saving:
Generally, payroll software is intended to combine the existing accounting system. which helps the companies to save time and money on calculating large amounts of data. Plus, there is quite a good provision in advance versions that companies spend forecasting and budget planning on each employee.
Payroll system involves every individual’s compensation, including salary, incentives, and bonuses. During the time of appraisal or to manage compensation, payroll software makes it easier for firms to evaluate employee performance.
An organization is supposed to follow all the country’s tax obligations and labor compliances like TDS, ITR, ESI, PF, etc. This improves companies’ reputations as steady employers and also helps in improving the brand proposition.
THINGS TO FOLLOW FOR AN EFFECTIVE E-PAYROLL SYSTEM
- All Essential Company Documents : Certificate of Registration, Company Tax AND TIN, Electronic Challan cum Return (ECR) document, and other company documents are needed to create an effective payroll management services.
- Choose a payment schedule : Payroll Schedule should be fixed and clean – weekly, bi-weekly, monthly, and semi-monthly.
- Classify employees : Classification and employee payment should be done based on permanent employees, interns, contractors, and freelancers.
- Terms of compensation : The company compensation should be updated in the E-Payroll system to check office timings, employee hours, overtime, etc.
PROCESS TO CREATE A PAYROLL MANAGEMENT SYSTEM
In Legaltoast , we’ve experts in Taxation & Accounting highly qualified Chartered Accountants who will be taking care of your end-to-end payroll process and compliance in the most effective way.
Legaltoast’s payroll management services include the following:
CTC Structure And Designing:
Cost to the Company or CTC is the gross salary package the company pays to its employee directly or indirectly. CTC covers basic pay, allowances, gratuity, reimbursements, annual bonus, annual variable pay, etc. It may be described as
Gross Salary + PF + Gratuity = CTC
CTC elements cover basic salary, the gross salary, the amount without any kind of deductions, health insurance, income tax, etc.; fixed pay; variables; TDS, etc.
In India, Labor Law, with its principle, focuses on employee rights protection which directs employers, employees, and trade unions, focusing on protecting employee rights. All companies in India are obliged to adhere to various lawful protocols set by different acts by the Labor law. Labor compliance is not only limited to filing PF returns, ESI returns, etc, but also includes managing employee registers and other valuable records. There are many laws applicable to employers and employees, depending upon the nature of their organization.
For example Factories Act 1948 is particularly for laborers hired in factories. It places down measures for the welfare, safety, and health of the laborers.
Employees Provident Funds and Miscellaneous Provisions Act, 1952 applies to companies having more than 20 employees. Under its Employee Provident Fund (EPF) social security scheme, both the employer and employee will contribute a specific amount. At the time of the employee’s retirement, he/she will receive a lump sum amount. This amount includes self contribution and employer’s contribution along with interest on both.
All employers are needed to file EPF returns every month.
In the event of labor non-compliance, a company may be punished or imprisoned for a period of up to three years.
At Legaltoast, our legal specialists can classify the labor compliance that is relevant to your business and propose to you the right guidance. We also guarantee time mandatory labor compliance filings are performed without delays.
Tax Planning For Employees:
Planning of tax payments is essential for salaried individuals as it helps save on taxes. Depending upon your business entity, employees’ designations, and salary components; Our taxation professionals can offer the best advice on tax savings in line with the latest amendments and rules.
TDS Deduction And Compliance :
As per the Income Tax Act, all earning individuals or companies making payments like salary, commission, interest, etc., are required to deduct a percentage before giving the full amount. Which is Tax deducted at source or TDS. The IT Act prescribes TDS percentages.
Setting Up Of Reimbursement:
Reimbursement is the expense paid for costs acquired. Some companies pay the employees back for business-related travel expenses, medical allowances, food and entertainment expenses, etc.
Right from reporting requirements to reimbursements, Legaltoast professionals help include your companies’ reimbursement policies. If you wish to set reimbursement as part of your employee’s salaries, then we can produce the salary structure to secure all tax compliance is fulfilled.
Preparing Employment Agreement:
An employment agreement sets down the requirements of employment and the rights, duties, and responsibilities of both parties during the period of employment. This agreement also helps employees get a fair understanding of the job responsibilities and the company’s expectations. Along with that, this serves as proof in the case of a conflict or misunderstanding among both parties.
Legaltoast’s specialists of legal documentation are proficient at making employment contracts for your consultants, freelancers, and part-time, full-time, and contractual employees.
Preparing HR Policy:
Every company operates based on some guidelines set by the head management and the HR team. These guidelines may involve the code of guidance for employees, their duties and responsibilities, the company’s responsibility towards the workers, discrimination policies, whatever activities are held offensive by the company, employee benefits, disciplinary actions, etc. The organization is free to draft its HR policies and procedures. Still, they require to be aligned with the company’s goal, industry, and law.
Drafting Leave Policy:
Leave policies are set by the state legislation Shop and Establishment Act and Factories Act as applicable. Usually, all State legislation holds a general provision where they provide seven holidays for national days and festivals.
Therefore, it is at your choice to decide the number of leaves, and our lawyers will help you frame it better.
Outlining Increments And Appraisals For Employees:
Performance appraisals and salary hikes motivate your employees to perform to their abilities. Appraisals provide them with complete, accurate feedback on their range and strength of improvement. Legaltoast can help you in planning out ways to assign increments and appraisals to employees.
REQUIRED DOCUMENTS FOR An E-PAYROLL SYSTEM
- Certificate of Registration (CoR)
- Electronic Challan cum Return (ECR) document
- Tax (Goods & Services) Certificate
- TIN (Taxpayer Identification Number) Certificate
procedure for payroll management services
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FAQs ON PAYROLL MANAGEMENT SERVICES
Payroll administration can be outsourced, run on our own or by software. But it is most beneficial when outsourced as it is cost-effective along with time and money-saving. And comes with the opportunity to work closely with the payroll experts and financial masters who are well versed on the latest tax rules and compliances.
Maintaining accounts, payroll, tax, and other financial responsibilities are very tiresome and complicated, particularly higher if your business is a startup venture. Therefore, by outsourcing the payroll process, you save some time and money; be guaranteed of efficiency in calculation and deductions; get expert guidance from payroll specialists, and accounting and financial professionals.
Statutory deductions are IT (income tax), EPF (employee provident fund), TDS (tax deducted at source), ESI (Employees' State Insurance) which are subtracted according to the individual's annual compensation and the state legislation.
The most basic benefits that companies allow are medical reimbursements, health insurance, wellness program funding, paid vacations, leave encasement programmes, etc. However, the sanctioned benefits as mandated by law are earned leaves; social security like ESI, PF, pensions, group insurance policies, maternity benefits; payment of gratuity, etc. These privileges differ depending upon the type of company and the state where it is located.
An allowance is a fixed amount that an organisation may select to pay its employees to include additional expenses. which can be travel allowance, medical allowance, overtime allowance etc. All financial gains that the company offers beneath the head "salaries" are taxable. Some allowances are partially or fully excused. Reimbursements are the amounts that a company pays back to its employees when an employee pays any business-related expenses, the company pays that amount back to the employee; this amount is called Reimbursements. For example, several companies present medical reimbursements where employees can get the amount by offering appropriate bills and proof of expenditure.