???? Phases of Payroll Processing

✅ 1. Pre-Payroll Activities

a. Employee Information Setup

• Personal details (name, address, SSN or other ID)

• Bank account details

• Job title, department, work schedule

• Salary or hourly wage

• Tax withholding forms (e.g., W-4 in the U.S.)

b. Company Payroll Policies

• Attendance and leave policy

• Overtime rules

• Benefits and reimbursements

• Bonus or incentive plans

c. Compliance Setup

• Tax jurisdiction setup (federal, state, local)

• Labor law compliance (e.g., FLSA, PF/ESI in India)

• Filing frequency and due dates

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✅ 2. Payroll Calculation

a. Gather Inputs

• Time and attendance records

• Approved leaves

• Overtime hours

• Bonuses and commissions

• Reimbursements (travel, phone, etc.)

b. Calculate Gross Pay

• For Salaried Employees: Monthly salary / Pay period

• For Hourly Employees: Hours worked × Hourly rate

c. Apply Deductions

• Statutory Deductions:

  • Income tax

  • Social Security (U.S.), PF/ESI (India)

  • Medicare (U.S.)

• Voluntary Deductions:

  • Insurance premiums

  • Retirement contributions (401(k), etc.)

  • Union dues

  • Wage garnishments

d. Compute Net Pay

$$\text{Net Pay} = \text{Gross Pay} - \text{Deductions}$$

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✅ 3. Payroll Disbursement

• Bank Transfers / Direct Deposit

• Paychecks

• Pay Cards (prepaid cards)

• Provide Pay Slips with detailed breakdown:

  • Earnings

  • Deductions

  • Taxes

  • Net pay

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✅ 4. Statutory Compliance & Reporting

a. Tax Filing & Remittance

• Deposit withheld taxes to government

• Employer’s share of payroll taxes

• File periodic returns (monthly, quarterly, annually)

b. Generate Year-End Forms

• U.S.: W-2 (for employees), 1099 (for contractors)

• India: Form 16

• Canada: T4 slips

• Other local equivalents

c. Maintain Records

• Payroll records (3–7 years, depending on local laws)

• Time and attendance logs

• Tax payment receipts

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✅ 5. Post-Payroll Activities

• Accounting entries (journal entries for payroll expense)

• Financial reporting

• Internal audits and reconciliations

• Responding to employee payroll queries

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???? Common Payroll Components

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???? Payroll Schedule Types

• Weekly: 52 times/year

• Bi-weekly: 26 times/year

• Semi-monthly: 24 times/year

• Monthly: 12 times/year

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???? Payroll Processing Methods

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???? Popular Payroll Software

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???? Legal & Compliance Considerations

• Minimum wage laws

• Overtime regulations

• Local tax codes

• Recordkeeping requirements

• Anti-discrimination and equal pay laws

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???? Best Practices

1. Automate where possible (time tracking, tax calculations)

2. Double-check calculations

3. Keep current with tax law changes

4. Ensure data security & confidentiality

5. Maintain detailed documentation

6. Regular audits

7. Provide employee self-service portals

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Would you like:

• A payroll checklist?

• A monthly payroll calendar template?

• Help choosing payroll software?

• A sample Excel payroll sheet?

Let me know how deep you'd like to go.