Busting the Common Payroll Myths

 03 Jul 2017

Figuring out the payroll process can be complicated for some businesses, especially for smaller businesses and start ups. Irrespective of the nature and size of your business you need to set up an organised payroll system. You can consider payroll as an extremely delicate process and therefore, it is imperative to know everything that is involved in it.

It is essential to pay your employees on time and the right salary. Lack of sufficient understanding often results in mis-conceived facts. Here are the common myths that you may come across:

MYTH# 1: One-off Process

Often you will hear people saying that payroll is a one-off process. Once you install the software your task is done but seldom do they realise that this is just the beginning.

In reality, payroll processes include constant updates and evaluation of the software. One needs to discard duplicity which normally occurs on a regular basis. Re-entry and error in data can be managed in a better way with the help of dependable software.

You are required to carry out audits at frequent intervals so that you have enter correct data into the system.

MYTH# 2: Payroll includes salary

Calculating salary is a part of the entire payroll process but there are various other tasks which are involved in it. Apart from salary, payroll consists of employee attendance, leave policy, deducting PPF, TDS and other funds. Incentives, bonus and other items also are calculated under payroll. Furthermore, payroll is a vital function which enables employees to gain their deserved compensation.

In simple terms, payroll is a combination of administrative and human resources process. The salary calculation rules are dictated by  your office policy while other considerations are based on government regulations.

MYTH# 3: Managed by Anyone

Maybe someone has told you that the payroll process is very simple. Yes, if you are outsourcing it to specialists, it is not a big concern. But if you are doing it by yourself or through an in-house team, it is anything but straightforward. Not convinced? Ask the person who actually manages it. When dealing with payroll you are required to handle the data with utmost precision as even a minor mistake can have an enormous effect on the entire business. Besides, it involves a number of confidential details which means you need a reliable person to handle this task.

Therefore, it is necessary to carry out a background check of any candidate you are interested in hiring. Analyse their behaviour and technical skills. In case your leading payroll employee has recently resigned make sure that you change all passwords and codes of important credentials. This will diminish all chances of any data being mis-used.

MYTH# 3: In-house payroll is cheaper and easier

This is the most mis-interpreted concept with regards to payroll. Most businesses think that payroll can be easily managed within office premises.

However, the truth is that you need an experienced professional to manage your payroll process. A payroll process involves varied tasks that are to be accomplished within a stipulated time period. This is the chief reason why you need skilled personnel for this designation.

If you still want to set up an in-house payroll team, it is important to keep in mind that the following tasks need to be fulfilled:

  • Regular salary updates of each employee on payroll software.
  • Excellent IT support to run the software.
  • Hiring additional staff and training them.

There is high probability that your payroll employee may not have adequate knowledge about the payroll process. This may lead you in turmoil and a phase of constant worry. You may end up not paying your taxes on time which may result into additional expenses and loss in the worst scenarios.

Instead it is ideal to hire a professional and experienced firm that can successfully carry out this task on your behalf.