Payroll is a complex process that becomes more challenging with a company’s unique processes, compliance issues, varying allowance and deductions, and constantly changing legislation. This often puts businesses at a risk as there is so much at stake in terms of penalties, additional scrutiny, and the reputation of the company. 

Many organizations manage this process in-house while some look for professional service providers. The goal is to avoid compliance risks and to adapt to the constantly evolving regulations. According to the 2017 NGA Payroll Complexity Index, payroll complexity is impacted by key factors such as managing payroll and employee data, security, and control in an ever more complex tax and legal landscape. Understanding challenges clearly and coming up with the right solution is the best way to overcome risks.

There are many important compliances that we need to follow. Let us look at some of them:

• Minimum Wages come under the Minimum Wages Act, 1948. The minimum wage rates are given by both the Central Government and the State Government. The wage rates vary on the employment, sector, and type of employee. According to this act, the employer is responsible to pay wages at least every month on a timely basis. The wage period may be fixed according to the convenience of the employer on a daily, weekly, or monthly basis.
• The Provident Fund allows the employees to save some part of their income. The Provident Fund is a number of funds accumulated through regular and monthly contributions made by an employee and their employer. According to EPFO (Employee Provident Fund Organization) rules and regulations, any company which has 20 or more employees should register for Provident Fund. If the company fails to comply with EPFO rules and regulations, then it will be charged with heavy penalties.
• The ESIC social security scheme brings reasonable healthcare to employees and their family members. As per the ESIC Act, all the companies consisting of more than 20 employees whose monthly salary falls under Rs.21,000 should register under the Act. So, if the company falls under the ESIC Act compliance then the employee's CTC needs to be updated including the ESIC employer and employee contribution.
• According to the Payment of the Gratuity Act, 1972, Gratuity is applicable to all the establishments such as NGOs, hospitals, and educational institutions with 10 or more employees.  As gratuity is a fixed contribution from the side of the company, it is shown as part of the CTC. Thus, making Gratuity part of the employee's CTC is mandatory.

Now, let us look at some of the most prominent solutions. One of the most popular solutions when automating payroll services is the use of a pay stub creator. A pay stub creator is an online tool used for conveniently creating paycheck stubs. They are easy to use and fast. All that organizations need to do is to get the tool online, choose the design that best suits them, then fill in the required details. These details might include the salary, employee, tax, and company details. 

Then there are different software applications for automating payroll services. One of the ways organizations can handle fast growth via technology is through the use of powerful payroll software. Due to this, some companies have come up with web-based payroll software applications that automate the entire payroll process for organizations.

Lastly, for companies that want to strictly focus on their core business and strategic organizational objectives, there are professional service providers to whom companies can outsource their payroll function. These professional service providers partner with companies for even their most complex payroll requirements and also assist with employee tax management, at the same time maintaining all statutory compliances for their clients. 

Every organization needs to save time as well as money when handling some business processes such as paying their employees. Automating their payroll processes is one of the best ways to do that. Those that fail to automate their payroll services spend so much time and resources using applications like Excel spreadsheets or filling different forms manually. This consumes a lot of time and has a high chance of miscalculations and errors, something that organizations need to avoid as much as they can. Using one of the solutions discussed above is a great way of avoiding penalties (that might come from incorrect salary payments) and streamlining the payroll processes.