Every business requires some methodology of processing the payrolls irrespective of the industry that business belongs to. There are some sections of the industry that require a more detailed payroll system in comparison to others to run their day-to-day processes smoothly. One such industry is the manufacturing industry. In this industry, many roles are on different pay scales.
There are multiple sectors in this industry which each company has to deal with, such as machine operations, assembly work, packaging of the products, shipping, organization, supervision, management, and much more. The industry is so vast even for small scale manufacturers that there is a need for sophisticated payroll services for manufacturing to reduce the chances of error in the manufacturing business.
In addition to the different sectors in the industry, the pay cycles of the workers are also different for many manufacturing companies. With different pay cycles mixed with multiple pay rate calculations, the companies also have to break down the salary of every employee to comply with the state labor laws. In short, for manufacturing companies, payroll management is one of the major time consuming expensive matters if they are doing it in-house.
In simple terms, you can define payroll as a list of employees who get paid for the work they are doing for your company. It is the money employer transfers to the employees based on the contract the company has with the workers. There are a lot of aspects of the payroll which the company has to consider to make sure they comply with all the laws and policies.
The Components of Payroll
Every component of payroll processing has its significance. When you have to pay your employees in the manufacturing industry, it is important to comply with the laws and policies stated by your company as well as the central and state government. The following are the main components of payroll.
At this stage, all the data validated by the accounts and HR department entered into the payroll system so that the actual payroll can be processed. The net pay that you get after all the calculations includes all necessary perks, allowances, etc. and excludes all the applicable taxes, etc. When you are calculating the payroll to be paid, you also have to get data from different sources such as attendance register. Once the payroll is ready, it is very important to double-check the values and verify the final payroll’s accuracy to avoid any issues in the future.
There are several deductions that need to happen at the company’s end before the employee gets the pay in his or her account. Such deductions include TDS, ESI, EPF, and other charges. It is the company’s responsibility to make these payments to the respective government agencies.
It is the responsibility of every company to keep records of all the financial transactions. The salaries are one of the most important aspects of the operational cost involved in running the business. It is very important to include all the information about the salaries paid on your accounts. It is also the responsibility of the designated payroll processing department in the manufacturing companies to make sure that the salaries and reimbursements paid to the employees are double-checked for any errors regularly, which makes Payroll Services for manufacturing even more challenging.
In general practices, especially after demonetization, the companies prefer to pay the salaries directly in the bank accounts. It is also easy to keep track of the payments made if they are visible in the bank statement. To complete the payroll process, it is important for you to ensure that there are sufficient funds in your company’s account. The payments can be made in bulk by sending a salary bank advice statement to your bank branch. The statement includes the necessary information such as employee ID, amount to be paid, bank account details, etc. For those who use payroll services for manufacturing, it becomes very easy to issue payslips, and if the software for payroll solution for manufacturing companies that you are using has an employee login section as well, the employee can check all the details in it and download the pay slips himself.
Once the payroll is complete, it is the responsibility of the department handling the payroll system to keep all the records systematically. In case the management requires some specific information about a branch or sub-section in the company, including the amount paid, perks, etc. you should be able to dig the information and provide it to them in the shortest possible time frame.
The process of payroll solution Manufacturing Companies is so complicated that they nowadays prefer to outsource the whole payroll system. When you outsource payrolls, the agency you are hiring will take care of everything from including the name and other details of the new employees, complying with the company’s policies and the law of the land, and calculate the amount to be paid after adding and deducting necessary amounts. They will be responsible for safekeeping all the records and send you weekly or monthly reports, as suggested in your contract with them.
How to Run Payroll?
Before you even start the hiring process, you should make sure that your business complies with all the central and state laws, such as labor laws and fulfill all the requirements. You should have the accounts set up for tax payments for your employees. Once you are ready with all the documentation and other requirements, you are prepared for the payrolls. If things start to get confusing for you, you may consider joining a payroll training program or outsource the payroll process.
You can breakdown the payroll process in 6 steps as follows:
The employee’s documents
When you hire an employee, it is important to have the payroll-related documents with you. Such documents include a contract that your company’s employee signs, PAN number, and other authorization forms. The content of the forms can vary from company to company and from post to post. The forms are also different for salaries and contract workers. With the help of this data, the HR department in your company will be able to include the employee in the payroll system.
Calculating the working hours
When we talk about the hours a worker has spent in your establishment, it can have multiple components. The employee might be working onsite or offsite. Also, overtime and other aspects should be included in this calculation. Most of the new companies can start with a simple hour sheet, but as the size of the company grows, you may want to consider systems like biometrics, etc. Many companies now consider outsourcing payroll management to companies that provide payroll services for manufacturing and industries.
Calculating the gross pay
There are two components of working hours which you need to consider while calculating the gross pay. The first component is the straight time, and the second component is the overtime. Generally, pay for overtime is higher in comparison to the straight time. Adding both will give the total gross pay of the employee.
Calculating deductions and benefits
As per the law, it is the company’s responsibility to deduct taxes, PF, and in some cases, EMI from the gross pay. Also, at this stage, the payroll department will add the charges such as TA and DA in the amount to be paid to the employee.
Paying the salary
The next step is to issue the payment to the employee. You can make the payment in cash, cheque, or direct deposits. Please note that if you want to make direct deposits in the employees’ accounts, a separate form will be required by the bank to allow such deposits.
Documentation of the payroll records
For every company, it is important to save all the payroll records. If you are hiring Payroll Services for Manufacturing, the company that is providing you the services take the responsibility of keeping all the payroll records as discussed in the contract with them. From time to time, the state or central government may ask for an independent audit for your company. At that time, you will need these records to make sure that you are complying with all the central and state laws. Also, at the time of tax filing for the company, these records are important.
Industrial and Manufacturing Services Provided by Paysquare
Industrial and manufacturing organizations have well-defined processes that they follow to ensure optimal productivity. For large scale industries, it is essential to use enterprise systems for payrolls and other accounting related operations. Without a set system, it is not possible to run an error-free payroll process in any organization. Paysquare provides payroll services for the manufacturing and industrial sectors to manage payrolls efficiently and smoothly.
The company offers an integrated payroll system that is highly customizable. It can easily work with the existing enterprise system that manages the rest of the operations in the unit to ensure a seamless flow of data and information. Based on the requirement of the client, Paysquare provides custom service portals for approvals and issuing payrolls. The offsite payroll system you can stay assured that there will be information leak at any step.
Paysquare also provides temporary staffing services for different sectors. When you opt for this service, every process that is included in hiring the temporary staff will be handled by Paysquare. The company will handle the contracts, payrolls, personnel administration, and documentation of the employee for your company. From the first step of finalizing the right candidates to the last step of making the full and final payment, Paysquare will handle everything on behalf of your company. The payroll services for manufacturing and industry by Paysquare makes the whole process simpler and easier to manage without the admin hassle.
Go for payroll services for manufacturing
Payroll management is an important aspect of every industrial and manufacturing company. There was a time when companies had to rely on handwritten or typed payroll logs, which were prone to human errors and frauds. As time passed by, automated systems start to take the place of an offline payroll management system. However, it was not possible for such automated systems to include additional categories or work with multiple pay scales in the same company.
The demand is the mother of invention, and such demand for flexible and customizable systems gave birth to current payroll services for manufacturing, which can not only work as standalone applications, but it is also possible to integrate them with the enterprise solution the companies are using. With service providers like Paysquare, payroll management has become easier for large manufacturing units where thousands of employees work on different pay scales in different departments under the same roof.