From the time you hire your first employee, there are some government norms you have to comply with and doing payroll becomes inevitable. Put simply, payroll is nothing but a database containing names and information of employees in a particular company along with the amount they are to be paid by the company for the work they do.
Payroll can mean different things to different people. Here are a few considerations-
Payroll is the amount you pay to the employees every pay period.
Payroll is the method used to distribute taxes and wages.
What are the parts that are included in payroll?
There is a lot than what meets the eye. Given below are a few of the payroll parts, take a look.
Employee information
Whether you use payroll software or not, this is necessary. Without the personal and professional information of the employee, it is impossible for a company to process the payroll for him. The employees also are required to fill the W-4 form. With this form, you will get the tax-related information of the employee. It also gives you their social security number, withholdings and federal income tax.
Hours worked
The HRMS software India has can easily calculate the hours worked by an employee but only when it has the data. If the payroll software is not integrable with multiple tools or has a mobile app then it will become troublesome for you to track the work hours. So, make sure the payroll software you invest your money in, has these two things.
Time off
The payroll processing takes place after taking into account the number of days an employee was absent. Was he on leave, sick, absent or gone on a vacation? The leave should be marked accordingly. The balance has to be checked and then the employee is marked absent or on leave.
Wages and salary
While salary is a fixed amount the companies give to an employee, the wages are paid to those who work on an hourly basis. To find the same out, the rate of pay is multiplied with hours worked.
Overtime
All the employees who are nonexempt are entitled to receive overtime pay. If the employee has worked for more than 40 hours, in most cases, he can claim overtime. The payment rule for this is 1.5x the normal pay rate.
Fringe Benefits
They are a kind of compensation. It can include assistance in education, retirement plan, discounts, insurance for health and more. Some of the benefits are taxable and some are not.
Other pay
Your employees may also have other sources of income like a rented room or house. The service providers may even be getting tips, no matter big or small, as an employer you should know.
Deductions, net pay, gross pay, garnishments, taxes like income tax, local income tax, state income tax, social security tax, unemployment tax and a lot many other things are also a part of payroll. We hope you found the article helpful!