Manual payroll is a process of calculating salaries, taxes, and other benefits manually.
Manual payroll is a process of calculating salaries, taxes and other benefits manually. This process is time-consuming as it involves manual calculation of salaries, taxes and other benefits by the HR team. There are chances of committing mistakes while calculating the same manually. These mistakes can lead to inefficiency in processing payroll and hence lead to dissatisfaction among employees which in turn results in attrition. In addition, repeated changes done by the government also add on to the complexity involved for the HR team.
This type of Process requires a lot of time, energy, paperwork, and resources.
Processing payroll manually is time-consuming and requires a lot of paperwork. When you calculate the payroll manually, you need to spend a lot of time in capturing the attendance, work hours, leave information and calculating each employee’s salary. All these calculations can be easily done with the help of payroll software in India, saving a lot of time and effort. In case there are mistakes in your manual calculations, it will lead to errors in bank payments which could be very embarrassing for employees. Most employees also complain about not receiving their salaries on time because of such mistakes. The continuous delay in salaries can cause dissatisfaction among employees which might lead to low morale or even employee turnover.
It is hectic especially when the number of employees increases.
If you’re managing a small business with a few employees, manual calculations are manageable. But for medium and large businesses, it is hectic especially when the number of employees increases.
As employee numbers grow, so does the complexity of payroll calculations. Payroll calculation becomes more complex when there are different types of employees such as full-time and part-time on your payroll. Adding deductions for overtime or promotions to your payroll sheet can be tedious and time consuming.
Generally speaking, the more employees you have, the harder it gets to calculate their salary manually. The work increases exponentially when there is an increase in the number of employees on your payroll and has to be done carefully because each employee’s salary amount is different based on various factors like allowances or deductions as per their job roles.
In India, the process of payroll management is not just to calculate the salary but also to pay statutory compliance.
In India, the process of payroll management is not just to calculate the salary but also to pay statutory compliance. “Statutory” means anything related to government rules or regulations. Therefore, complying with statutory requirements is an important part of running a business in India.
When it comes to payroll management, there are several regulatory and statutory compliances that you need to take care of. You must provide your employees with EPF (Employees Provident Fund), ESI (Employees State Insurance), Gratuity and many other benefits as per Indian law. In addition, you need to pay tax on behalf of your employees under TDS (tax deducted at source).
If you fail to meet some or all of these requirements, you may be taken before a labor court for violating the rights of your employees. This can lead to high penalties and financial loss for your company.
The company must make timely payments of taxes and comply with several laws such as PF, EPF, ESI etc.
It helps in complying with the rules and regulations of PF, EPF, ESI etc.
- The company or employer must make timely payments of taxes and comply with several laws, such as Provident Fund (PF), Employee Provident Fund (EPF), and Employee’s State Insurance (ESI) etc. The payroll software helps your business to be compliant to all these laws at all times.
Maintaining a manual payroll can be very difficult as everything has to be calculated manually for each employee and there is no guarantee about its accuracy according to individual needs.
With manual payroll, you run the risk of inaccurate calculations. Inaccurate calculations can lead to unnecessary tax deductions and you can also miss out on employee benefits. Calculating payroll manually is also expensive, as it takes up a lot of time. You need a dedicated employee to do it efficiently, but even then an error is always possible due to human error.
On top of that, the company is prone to errors which can prove costly in the long run.
Payroll is a time-consuming and complex process, which requires you to be on top of things. Payroll is inaccurate, you will be underpaying some people and overpaying others. So if a mistake goes uncorrected for too long, it can cost you huge money in the long run. On top of that, if you don’t have a proper system in place, there might be security breaches and confidentiality issues with your employees’ salary slips and tax details.
In short, manual payroll has its downsides:
- Manual payroll is susceptible to human error
- It doesn’t guarantee the confidentiality or data security