Payroll Management Process: 7-Steps Quick Guide

Khyati Sagar

Senior Writer

Payroll Management Process: 7-Steps Quick Guide

There’s no denying that the calculation of gross salaries and deductible amounts is a tedious task. It involves risks as a tiny calculation error can result in heavy fines and penalties for businesses. 

Every year 40% of small to medium-sized companies in the US pay a payroll penalty. Do you know why? These are mainly due to filing errors or not depositing withholdings on time.

Despite technological advancement, many organizations still follow the traditional manual way of payroll processing. Manual ways are more prone to human error and require an extra set of manpower and time.

However, with the right payroll software, you can easily avoid such mistakes. 

Looking for Payroll Software? Check out SoftwareSuggest’s list of the best payroll software solutions.

Besides, most of them lack a well-defined payroll management process that can ease up the whole process. 

This article will break down the different stages of payroll process flow and help you avoid losses. 

What is the Payroll Management Process?

Payroll refers to the amount of money a company pays to its employees and workers in terms of salaries and wages. It also includes the records of employee information. 

The payroll management process is what an organization does in the process of administering and implementing payroll functionalities. Some of these functionalities include managing staff financial reports, such as wages/salaries, paying bonuses and incentives, deductions, and other such details. 

Furthermore, it involves a continuous process of reviewing and updating the payroll database. 

Most businesses have embraced the technology era and started using payroll management software to record employee details and manage salaries. Most advanced solutions also track hours, manage leaves, and deductions amongst other payroll functions. 

The payroll process is an integral way to establish financial stability and transparency. 

Stages and Components of Payroll Processing

Here we will discuss the different elements of a complete payroll process in HR

1. Define the Payroll Policy

The payroll process begins by defining the payroll policy. 

A payroll policy is a set of guidelines and regulations related to how payroll processing should be carried out. It describes various processes: administration of the employees’ salaries and/or wages, time tracking, payroll schedules, and payment methods of an organization. 

The policy is defined to bring transparency into the whole payroll processing and make employees aware of their rights. 

Also Read: Payroll Process: Manual Vs Automated Payroll Processing, Winner Revealed

2. Collect and Verify Inputs

Once you have defined the policy, the next step is to start collecting your employees’ inputs. 

These include employees’ PAN numbers, addresses, bank details, and other important information. Generally, all this information is collected during the onboarding process. 

It’s crucial that all the documents that you receive are verified to check their authenticity. Using HR software, you can easily store all the information online at a single location. It keeps the information organized and provides easy accessibility as well. 

3. Payroll Calculation

At this stage of payroll management processing, the verified inputs are fed into the payroll software. 

The software automatically gathers all the required data from the system and accurately calculates the net payment amount. It takes into consideration different inputs like no of days worked, the commission received, necessary deductions, and taxes due. 

The use of payroll management software eliminates the risk of clerical or mathematical errors and gives out accurate numbers. 

4. Statutory Compliance

Every organization is required to comply with payroll laws and regulations as laid out by both the federal and state governments. All statutory deductions like EPF, TDS, ESI are deducted at the time of processing payroll.

Payroll statutory compliance is a set of procedures that goes into the generations of payroll and other processes. In other words, it is the legal framework that every company needs to stay adhere to while dealing with its employees. 

It ensures that all staff and employees are treated and compensated fairly by management.

5. Recording Into The Accounting System

The next thing to do is process all the payroll data into the accounting system. Every company keeps a record of all its financial transactions. 

Salaries and compensations paid are considered operating costs that need to be reported in the books of account. Large enterprises generally use end-to-end accounting software that includes payroll processing as a module.

Whereas for SMB, a holistic accounting system can be a bit expensive. That’s why you will generally find them using two standalone systems that integrate with one another. 

6. Payouts Are Released

It is followed by reimbursement of salaries to the respective individual’s account. You can even pay your salary by cash or cheque.

In fact, for companies that use payroll software, the amount is automatically reimbursed to the accounts on the decided date. It also offers an employee self-service portal where they can easily publish the payslip, and employees have easy access to it. 

7. Payroll Reporting

Once the payroll processing is over for a particular month, the top management team may ask for reports such as location or department-wise employee cost. It is the responsibility of the payroll officer to dig into the data and generate reports for actionable insights. 

Now that you know how payroll management processing works, let’s look at the top payroll solution that can streamline the entire process. 

Top Payroll Solutions for Efficient Payroll Management

1. Keka

Keka is one of the best payroll management systems that is set to revolutionize the Indian payroll industry. It offers a range-based salary structure that simplifies the automation process for any size of the organization.

What’s more, you can easily review and draft your compensation plan in Keka and stay in complete control of statutory compliance. The best part is that you can release payslips in various formats, including mobile apps, email, or SMS.

Keka software


  • Expense management
  • Seamless integration
  • Reporting and analytics 
  • High security
  • Easy interface


  • Starts at INR 6,999/-

2. Zoho Payroll

Zoho Payroll is a simple yet powerful payroll management system that comes packed with a robust set of features. Some of these include automatic payroll calculation, generates pay-slips online with a thorough breakdown of taxes, statutory compliance, and much more.

Besides, its employee portal promotes easy collaboration between employees and your payroll staff, reducing the burden of employee requests.

zoho payroll dashboard


  • Compliance and reporting
  • High security
  • Employee onboarding
  • Data migration
  • Gratuity settlement


  • The free version is available. The premium version starts at INR50 per month per employee. 

3. Wallet HR

Wallet HR is an end-to-end HR software that offers payroll software as a standalone solution as well. It is offered both on-premise and on the cloud to enable payroll managers to carry out their tasks from anywhere. The system is so powerful that it can process epayroll for 10,000 employees in under 10 minutes.

Wallet HR


  • Data generation
  • Multiple salary structures
  • Financial management
  • Payslip configuration
  • Seamless integration


  • Quote on request

4. GreytHR

GreytHR is a robust payroll management process solution best suited for small businesses. Some of the top companies using GreytHR are Toshiba, Da Milano, Kotak, and more. It processes employees’ salaries with just a single click, making the whole payroll management quick and easy.

Besides, its in-built payroll calculator offers flexibility to handle multiple salary structures.



  • Leave management
  • Automated payroll inputs and payslips
  • Statutory compliance
  • Payroll reporting
  • Administrative management


  • The free version is available. The premium version starts at INR1495 per month. 

5. HRMantra

HRMantra is a payroll processing solution that is designed to handle the most complex payroll in the world. The best part is that you can create unlimited pay heads using formulae and calculate loans, taxes, and salaries. Apart from standard reports, HRMantra enables you to generate various other reports, including salary reconciliation, transfer and promotion reports, and more.

HRMantra software


  • Loans or salary advancement
  • EMI calculations
  • Payslip report
  • Web payroll outsourcing
  • Flexible benefit plan


  • Quote on request

Wrap Up

By automating the payroll processing management, businesses can improve efficiency resulting in increased outputs. 

With the rising popularity of automation, manual accounting and payroll processing will be a thing of the past. You can stand out from your competition by embracing technology and providing a satisfying service to your employees.

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