Complete Guide to Online Payroll Management System in 2023

25% of all workers in the United States have experienced payroll process errors, and 49% plan to look for a new job if a payment-related error occurs again.

In addition, the IRS has incurred over $6 billion in penalties for late payments on employment taxes in 2020.

Simply put, a company can't afford to make mistakes when paying their employees because it will land them in hot water with their employees and government authorities.

Implementing a solid and dependable payroll management system is one way to avoid these blunders.

This article will look at what makes a sound payroll management system and how to do payroll with a solution that meets your needs.

What is an Online Payroll System?

An online payroll management system is a set of procedures and auxiliary tools that assist businesses in managing their employees' wages and employment taxes.

They are most commonly used to track employee hours, holidays, payment sanctioning, and other payment processing aspects.

Why Do Businesses Need to Get Employee Payment Management Software?

You can't pay employees if you can't run payroll. Your company cannot function without employees. Employees expect to be paid on time, and if you can manage payroll efficiently, you can avoid losing key team members and even facing legal issues.

The following are the most common reasons to get payroll management software:

● Legal necessities. Filing payroll taxes is subject to unique federal and state rules and regulations. If you cannot file payroll reports on time, you may face significant fines or penalties. You are also liable if you mistake an employee's pay and do not correct it. Therefore, it is critical to maintain as much compliance as possible.

● Employee retention. Superstar members of your team are likely only to stay if you can pay them correctly or on time. Vital employees can find work elsewhere, so keeping your team and ensuring that their pay is always completed accurately and on time is critical.

● Employee productivity. You want your employees to perform and do an excellent job in addition to simply keeping them. Even if you can keep them, failing to pay them on time or correctly can cause them to lose interest and look for new work.

● Business finances. Payroll management errors can harm your finances. You may not only be fined, which will cost you money, but you may also believe you have more in your possession when the reality is different.

How to Manage Your Payroll?

There are several steps to manage your payroll flow, such as:

Step 1. Create employee database

Payroll is the process of introducing new employees to the company, opening their accounts, and obtaining documents such as a PAN and an Aadhaar card. If you are doing payroll for the first time, you must make a list of all employees in the company and then add new hires to it.

Creating this list is simple when starting, but it becomes more difficult as your business grows. It is where intelligent payroll management software comes in handy. It has features like employee self-service that make collecting employee data a breeze.

Step 2. Define your payroll policy

This step entails defining your company's payroll policy. First, you must consider a pay policy, which is the net amount to be paid to different employees based on their role and position, as well as divide the salary structure based on the benefits you provide, such as flexible benefits, HRA (house rent allowance), and so on. You must also establish a leave and attendance policy.

Step 3. Collect inputs

Typically, you collect employee inputs such as PAN and bank account details during the employee onboarding process. Other data inputs needed for payroll processing include employee leave and attendance data, income tax declarations, eligibility for various benefits, shift timings, comp offs, and claimed reimbursements. The finance and HR teams work together in small businesses to collect this information.

Smart payroll software allows you to handle all of this in one place quickly and even allows employees to make tax declarations. Moreover, the software should support the old and new tax regimes because India has two tax regimes.

Step 4. Calculate payrolls

It is the process of calculating the actual payroll. After making the necessary deductions and taxes, calculate the "net pay or gross salary" for all employees.

Payroll calculation is complex using spreadsheets or manual methods. A missing zero or an extra one can lead to significant payroll errors. It has several consequences, including incorrect salary payments, tax filings, and employee distrust.

Thus, it is always better to use employee payroll management software to calculate quick and accurate payrolls.

Step 5. Distribute payslips

The final step is to distribute pay stubs to employees. In India, this is required by law. Payroll software eliminates the need to send pay stubs to individual employees via email. They can access it from the employee self-service portal at any time for any month.

Best Payroll Management Solutions

There are two main approaches to calculating your payroll:

Manual payroll management

This method requires payroll, HR, and finance teams to calculate payroll manually. Following employee onboarding, the HR team collects critical employee information such as PAN, address, bank account information, etc. The finance team then computes net salaries after all necessary deductions and taxes.

This entire process is carried out using spreadsheets, which makes it time-consuming and error-prone.

After the net salaries have been validated, the finance team must ensure enough money in their bank accounts to make the transfers. The founder must then share an OTP with the finance team to process the payment for each salary disbursement.

And if something is missed or calculated incorrectly, your company may face payroll management issues, such as statutory compliance issues, which can result in large penalties. Worse, all this time spent by various teams could have been spent on more productive work that could have resulted in business growth.

Automatic payroll management

All of the above-mentioned time-consuming tasks are handled by technology in the automated payroll process. It computes salaries automatically after accounting for leaves, statutory deductions, bonuses, and other payroll-related factors.

Before disbursing salaries, advanced payroll software such as TrackOlap Payroll handles compliance from registration and payments to accurate return filings for TDS, PF, PT, and ESI.

Automated payroll management is the most dependable method regarding process speed, security, and confidentiality. It is also time-saving, accurate, and transparent.

Benefits of Employee Payroll Management Software

Compliance is automated.

Businesses, particularly startups, can face legal issues due to compliance errors. Payroll management software automates compliance payments such as TDS, PF, ESI, and PT and their quarterly return filings. In addition, the software keeps you updated on new tax and labor laws by automatically detecting changes.

It saves time.

Many businesses waste time managing employee payrolls that could be spent on business growth. Not to mention that accounting for relevant factors such as overtime, vacations, and bonuses can become quite complicated without proper payroll management. An easy-to-use payroll software saves time, simplifies, and accelerates the payroll process.

Convenient and simple to scale.

A cloud solution automates time-consuming payroll calculations. It even backs up data in storage devices in the event of a system failure. In addition, a company only needs an active subscription to keep the payroll process running. As a result, payroll management software enables the company to scale easily.

Reduce overheads.

Because payroll directly impacts a company's budget, using payroll management software ensures that valuable resources such as skilled professionals do not waste time performing manual tasks. It also ensures that money is well-spent on outsourcing payroll management services, saving businesses significant resources, time, and money.

How Is TrackOlap the Best Payroll Management System?

Look no further if you're a startup looking for the simplest, most efficient payroll management software. TrackOlap Payroll's an all-in-one HR Software that assists businesses with various tasks, including attendance management, document management, compensation, leave balance system, payroll processing, and statutory compliance.

Payroll automation

TrackOlap Payroll assists in the management of employees from onboarding to exit. It assists in generating an offer letter from a predefined template, manages attendance, and allows employees to request leave. The HR Management software also includes an employ ee self-service portal where employees can manage their pay and taxes. Employees can view their pay stubs, salaries, documents, reimbursements, and tax declarations.

Automated compliance

TrackOlap Payroll software not only automates compliance for PF, TDS, PT, and ESI but also files returns regularly. In addition, it generates notifications, alerts, and reports for both the employer and the employee.

Do you want to try our incredible payroll management system? Then, Book a Free Demo session with our team today. We will help you understand how you can better manage your payroll system with easy and simple software.