Payroll Set-up Tips for New Businesses

Running a new business effectively amid competition brings on a whole new set of challenges. To expand a startup, business owners need to hire talented employees. Companies need to focus on each step properly, including payroll. Otherwise, it will dent their reputation in the market. Setting up payroll processes properly can be hard for many new startups. Here we mention step-by-step guidelines to help you ensure the same in real time. 

Tips to Set Up the Payroll for Startups

Review all Legal and Tax Guidelines 

Before setting the actual payroll process for your startup, it's extremely crucial to conduct a thorough review of all laws, policies, and guidelines that the government deems legally binding when giving salaries to employees and setting up your overall payroll system. This may involve HRA, travel, necessary tax deductions or any other legally necessary benefits that must form part of the salary. However, the actual rules can be different for different states. So, it would be good for companies to check out local government’s regulations for any additional requirements.

Apply for Necessary Documents 

The next step in payroll setup is to acquire the necessary documentation by which companies officially start the employee payroll process. These documents may involve all legal processes on behalf of the company and employees. This also varies from country to country. In India, laws require the form of obtaining a TAN or tax deduction and collection account number. New hires also need to fill out certain forms at the time of hiring, so companies need to have these papers on hand.

Decide the Pay Structure 

Companies need to analyse their current situation, future potential and how they want to get there before making decisions to manage the payroll structure. Besides, the actual salary the company is going to pay to the employees. All that will form part of the CTC or cost-to-company components. Some other components it may include are allowances, PF, insurance, etc. These help determine how a company breaks down an individual salary, how much the employee will receive and when.

Select the Payroll Software 

Companies are using the bookkeeper or HR teams for managing payroll, and it's a tried and tested method. However, it’s not a great option for scalability. When starting your startup, it seems okay. But once your company starts to grow and the number of employees increases, the complications arise too with payroll systems. So, a proper payroll software that allows seamless operations is important to have.

Set Up the Payroll Schedule   

Companies go through the legal formalities and decide how to manage payroll and its structure. They must determine the payroll schedule too. They can choose to pay their employees weekly, bi-weekly, or monthly. In some cases of contractual employees, companies may pay a one-time amount. In your startup, you need to decide which pay schedule is the best for you. Once a company decides on its payroll method, it can set this in the payroll software and let it work. 

Roll out Salaries, Pay Taxes 

Once all the setup is complete, it’s time to pay the actual salaries and, of course, the tax deductions that come with it. The process is easy if you are using the right software as it pretty much automates most things. 

Conclusion 

Using aforementioned methods you can set up your payroll process for your startup effectively. It's not easy for newcomers to understand things easily, and a small mistake can impact a brand's reputation. If you are starting a business and want the right payroll management company for handling your payroll processes, contact Kutumbh HRCare (Kaam matlab Kutumbh) - a credible HR and staffing service provider.