My Presentation About Payroll System

Payroll System Definitions: • A list of employees and payments due to employees during a specific pay period. Functions: • Collection and processing of all the information needed for the generation of pay cheques. • Generation of payroll records for accounting. Gross Pay: • The amount of money earned by an employee during a pay period is called Gross Pay. Categories: • Salary: ◦ It is a fixed sum of money paid to employees in return for the services rendered. Time is not taken into account for this type of employee payment. • Wages: ◦ This type of payment is done on hourly basis. The payment is made against the number of hours worked by the employee. ▪ For this type of payment, time sheets are prepared. ▪ Time sheets can be prepared both manually and by RFID of the employee. ▪ RFID is a little object like a credit card. It has the information of the employee on a magnetic strip. Which is scanned and recorded by a computer program. Commission: ◦ Sales employees are often hired on commission basis. Commission is paid on the basis of sales. It is usually a %age of sales. • Salary Plus Commission or Bonus: ◦ Sales employees often get a basic salary plus a %age of their sales as a commission or bonus. • Piece Rate: ◦ In this type of payment, the workers are paid against the number of articles they manufacture. e.g. mostly the surgical contractors in Sialkot are paid in this way. Over Time Pay: • Limit of working hours (40 hours a week) • Rate is 1.5 times as mentioned in Fair Labor Standards Act 1938. Employer paid benefits: • holidays •

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vacations

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sick days

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insurance

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retirement plans

Payroll Taxes:

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Social Security Medicare

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federal income tax

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state income tax

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state unemployment tax

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federal unemployment tax

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worker compensation insurance

Net Pay: • Net pay is the sum total of gross salary, all the employer paid benefits, overtime payments, less deductions made in respect of payroll taxes, employee paid benefits, advances or unpaid leaves. Case Study: Studied the Colaro Sports Payroll System • • • • • • • • • • • • •

Manual Time Sheets Time sheets checked by HR Supervisor Time Sheets reconciled with the time keeping records with PR Clerks Overtime payments are calculated on the basis of time sheets Exempt Employees (Managers, Heads of Dept.) are not taken into account Contractors are given per piece rates Gross pay is based on the sum total of salaries, wages or other payments plus the employer paid benefits Company is paying social security benefits to its employees Company is paying 1.5 rate for overtime to hourly waged workers Fixed advance deductions are made from the Gross pay 2 and half million payments are made to outside vendors also Outside vendors have their respective ledger accounts Net pay is calculated and paid via cash vouchers and/or cheques

SWOT Analysis: • Strengths: ◦ Manual time sheets are easy to prepare for low educated/computer illiterate person employed at the gate ◦ Any employee can check his records by going to the HR supervisor. •

Weakness: ◦ Security of time sheets against possible alterations ◦ Storage and management of the time sheets is very difficult ◦ Not easy searching.

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Opportunities: ◦ Company can and should maintain a computerized system for time keeping which is more secure and fast way of keeping the time records.

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Threats: ◦ Alteration of time sheets ◦ possible wastage