What is Payroll Accounting ?
Payroll Accounting refers to the record of an employee’s compensation, benefits, payroll taxes, employer and employees contributions towards PF, ESI and any other deductions from wages under different heads. All this information are placed in financial records of an organization to get an overview of the payroll expenses and details about each transactions. Payroll accounting lets you keep track of the cost of each employee or Cost to Company (CTC)
Why Accurate Payroll Accounting is Necessary ?
Let’s look at the benefits of accurate payroll accounting.
Determines the Cost of Each Employee
Through payroll accounting process an organization maintains the record of employee costs. This way, we can determine business-related expenses related to labor costs. Also, it allows us to determine the actual cost of hiring of different types of employees based on skill sets.
Ensures Tax Compliance
Payroll accounting provides us with a record of tax obligations and legal obligations. This ensures timely payments and deposits of employer or employee contributions to government authorities and timely filings of the same to avoid expensive penalties and tax audits. Moreover, employees will also be able to track the amount of their compensation allotted for tax obligations.
Evaluates Company Expenses
Accurate payroll helps us to see the costs associated with employees so that we can use this to assess profitability.
Factors that impact Payroll Calculations in India
Several factors impact payroll calculations depending on payroll policy and government policies in India.
Income Tax: Employees are subject to income tax based on their salary and allowances. Employers must deduct tax at source (TDS) from their employees’ monthly salaries and deposit it with the government.
Employee’s Provident Fund: Employers must contribute to the employee’s provident fund (EPF), a social security scheme. The contribution is usually 12% of the employee’s basic salary and is matched by the employer.
Employee State Insurance (ESI): ESI is a social security scheme that provides medical and cash benefits to employees. Employers with more than 10 employees (in some states it is 20 employees) must register under the ESI Act and contribute 4.75% of the employee’s salary, while employees contribute 1.75% of their salary.
Professional Tax: Some states levy a professional tax on employees, which is deducted from their salary. The tax rate varies from state to state.
Payroll Accounting with TRUSTLINK
- With the adoption of latest technologies and domain experts, the risk of error is significantly reduced.
- Reliable service support with expert consultation makes the process smooth.
- We keep in mind the requirement of proper integration of our payroll process with your organizational framework.
- Our fully outsourced service offers complete peace of mind by ensuring that your business functions are well taken care of and your company is also legislation compliant.
What our customer say
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