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Payroll Management

 
Payroll is defined as a method of administrating employees’ salaries in the organizations. The process consists of calculation of salaries and tax deductions of the employees, administrating the retirement benefits and disbursements of salaries to employees. It can also be called as an accounts activity which undertakes the salary administration of employees in the organization.

Administrating the employees’ salaries is not an easy task, the HR and accounts department work together to calculate and disburse the salary to the employees.

Thus, payroll management can be further subdivided into two sub processes, i.e. Payroll accounting and payroll administration.

Payroll Accounting
Payroll accounting involves calculations of employees’ salaries and tax deductions. It also undertakes the activities such as preparation of tax returns, maintaining the payroll records, etc.

Payroll Administration
Payroll Administration involves managerial activities such as maintaining employees’ records, referring employment laws. Here, the HR comes into picture which maintains the daily record if employees attendance.

      
Figure: Payroll Process


Database of employees is maintained. Employee’s details such as name, employee ID, basic salary, daily attendance, etc are recorded. Gross Salary is calculated after adding the allowances and incentives to the basic salary of the employee. Net salary is calculated by deducting the tax and other calculated deductions (loan installments, etc).
 


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