What is Payroll?
Payroll is the simple term of paying the employees by the employers in an organization. As this is a large expense of a business, there should be an established system or process to pay the employees. The more systematic the process is the more accurate and consistent will be the payment.
If consistent and accurate payment can be maintained then management can focus on other profitable activities and areas.
What is Payroll System?
When we are not privileged in technical areas, then all these are run manually with lots of documents and sheets. It was a time-consuming task too. After the innovation of software, every management system including payroll goes with a quick system. It goes with tracking the data of the salary and employees’ details, tracking the hours, estimating tax and deduction, generating reports, paying tax to the government, paying fees to insurance companies, etc.
The payroll system is crucial for every small and large company. It is amazing to maintain the system with very little data. It asks a very limited amount of information or input to run. The overall system is designed in a built-in system and when you input all data it will automatically be updated.
Purchase or Outsource
Initially when there is the innovation of the payroll software then many of the companies outsource from other software companies. In the present day, even some companies take the payroll as outsourcing. In this case, it may cost much but the companies taking outsourcing services don’t have to take the pressure even. Companies do not need to have full-time employees for this task even.
But there are some discomforts too like, the companies outsourced payroll system cannot have control over it. They cannot make the changes when it is necessary and have to wait for the outsourcing companies to have time to get the update. So, purchasing software and using it in the house is the best option to use. Then they need full-time employees to run and maintain this.
A guide for Running a Payroll Software in Bangladesh
The main role of Payroll maintenance is divided into two types
Distribution of the employee contribution correctly.
Payment of the exact amount of tax to the Government.
Usually more or less, payroll at all types of companies or organizations is the same in functions. Companies can set some sequential steps that they may need to know to run the software nicely.
Initial Stage of Payroll
The basic ingredients of the payroll system that are primary concerns are
- Recording data of employees like personal and payment information in the organization.
- Estimation of the employee salary.
- Estimation of the tax that employees are liable to pay.
- Payment of the salary or wages to every employee with cheque or cash or bank transfer.
- Payment of employee tax to the government.
- Maintenance of any business records.
- Maintenance of other allowance like a bonus
Running a Payroll
Outsourcing
You can outsource a third party company for running payroll. For all the stress and tasks you can depend on the hired professional. Just contact the concerned parties and have the changes done you need. You don’t have to keep expert employees inside the companies.
One of the negative sides of this is that you have to pay more for the extra responsibilities that bestow on the hired professional. Otherwise, it is one of the best ways to get work done with professionals.
In House Payroll Software
If you don’t want to outsource the software just purchase one for the work you need to do. You have to maintain it on your basis and hire expert employees to run the software. In this case, you have to take all the burdens on yourself and solve every problem associated with it.
You don’t have to spend a larger amount on this software but have to keep trained employees on this activity. So, this can cost extra money.
Input of Data
First, you have to take all the data from the company employees to run the further process. The whole information system contains
- Name, address, TIN and joining time of the employees.
- Pay rate and working hours.
- Tax rate, allowances and tax deduction.
- Record of any overtime, bonus, increments, etc.
All of that information is easy to perceive and work on.
Estimation of the Wage
The estimation of the wage will be done through the software. There would be the formula given and the process of calculating the salary, so it is easy to estimate the gross and net salary of the employees. Although all of these are stated and measured according to the software program, you should know the process or estimation manually.
Deterring Tax Calculation
The employees have to pay tax to selective authority and also there is the deduction of tax for funding social security. Your company has the responsibility to pay the tax on their accounts.
On the other hand, as an employer, your company has to pay tax in terms of the employees of your company. So, it is your responsibility to pay all the taxes accordingly and that function should be worked in the software.
Additionally, there should be the system to make other adjustments like the contribution of pension plans, insurance plans, and any other deducting sources.
The retirement or pension plans are made before the tax deduction to reduce the taxable income of the employees. An incentive is also set in the time of retirement planning.
Payment to the Employees
Now it is time to pay the employees their money. There is the feature added to the software that you can use to pay the employees through bank transfer or cheque. And it is done after calculation of the contribution and withholding tax.
This process in the software is much more trusted and acquired as error possibility is very low.
Generation of the Reports
There are options for generating reports to different stakeholders of the company. You can get the options at the same place and get the reports with just a click. Some reports should be generated each month and generation times of other reports are stated properly. You should add all the necessities to generate perfect reports so that stakeholders can get the proper estimation.
Trouble Shoot
Softwares are not far behind from 100% perfect and uninterrupted service. There may be some uneven and unwanted errors and technical problems. You have to understand the difference between network and technical problems.
When there is a network problem, it can be booted evenly and the problem would be solved on its own accordingly. But when there is a technical problem, the problem should be communicated to the hired professionals if it is outsourcing or the service provider, if it is in house operation.
Final Verdict
Every Payroll software runs with the same authorized ways of estimation and generation of reports. There would be some extra functions that may add extra value but the main components are the same. So if you know the collective prevalent factors then it would be easy to run the payroll software of any type. All the things you give the inputs and other things are done by the software itself.
