2 Fundamental Purpose of the Payroll Management System: Advantages & Stages

In this article, you will gain an in-depth understanding of the Payroll Management System as well as the purpose of the payroll management system.


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    Purpose Of The Payroll Management System

    Purpose of the Payroll Management System

    Every time a new company is formed, it is faced with several numbers of obligations, such as finding personnel, managing them, raising their pay, providing incentives, and so on, which is a difficult procedure to follow. Payroll is one of the most important responsibilities of large corporations. A payroll management system is the method by which employers take care of their employees’ payrolls. It is also how an employer demonstrates their dedication to their employees, meets their responsibilities to governmental bodies, and maintains accurate financial reports.

    In this article, you will gain an in-depth understanding of the Payroll Management System as well as the purpose of the payroll management system. You will also learn about the stages and advantages of the payroll management service in India.

    Understanding the Payroll Management System

    A payroll management system is a procedure that aids a company organization in streamlining employee wages, incentives, tax deductions, and other essential components of their net pay. Simply put, a payroll management system is the process in which employers pay their employees’ salaries and maintain accurate financial records to pay taxes.

    The payroll management software aids in organizing a company’s salary payments. The system handles the matters pertaining to wages and deductions, determines salaries, tax deductions, rewards, etc. on its own, and saves them directly into its database.

    The purpose of the payroll management system in any business is to help inspire workers and make the payment of employees and submitting payroll taxes easier.  Employers could risk wage claims and severe fines if they do not have a reliable payroll management system for paying employees, deducting taxes, submitting taxes, and keeping records.

    Purpose of the payroll management system

    In India, the two fundamental purposes of the Payroll Management System are-

    1. One purpose of the payroll management system is to deal with the macro tasks which cover income, marketing, strategy, and other things.
    2. Another purpose of the payroll management system includes the micro tasks concentrated on a firm’s day-to-day activities.

    The purpose of the payroll management system is to simplify, automate and organize the micro tasks in order to provide the HR team with more time to concentrate on the macro tasks. You don’t need to be concerned about processing, managing, or producing employee paystubs, payments, and taxes. The outsourcing team takes care of the tax-related business. You are simply required to attend to important activities like earnings, planning, and the effectiveness of sales.

    Five essential advantages of a payroll management system

    The five essential advantages of a payroll management system are as follows:

    1. Compute payroll automatically The payroll administration software you choose should be able to automate processes like generating gross wages, determining net incomes, handling payroll, producing pay stubs, etc. Some payroll software requires you to fill out the information once. Only a few configurations, such as payment periods, tax records, salary due, etc should be necessary for the payroll system to handle the entire payment process at the required frequency.
    2. Time-saving and minimizes error Payroll management software can handle large amounts of employee salary figures effectively.  Using the most current IT and governmental compliance standards, this system calculates pay levels automatically and stores the data on its servers for easy retrieval. It significantly shortens the time required for the complete payroll process and eliminates the chance of wage calculation errors. If any mistake is found then it can be fixed right there.
    3. It’s fairly priced With the use of payroll software, employers may manage payroll administration without adding extra staff. It doesn’t call for any additional expenditure which makes it affordable.
    4. Security- Most payroll management systems save data on safe cloud servers, guaranteeing the confidentiality of your data. Passwords or other appropriate security methods are required to access the secret papers, protecting your data from unauthorized access.
    5. Boosts employee satisfaction When payroll processes are simplified, employee satisfaction can be raised. Employees will get their salaries on time with the help of automated payroll software. 

    Stages of the Payroll Management System

    In order to achieve the purpose of the payroll management system, it is crucial to understand the various stages of the payroll management systems in the country for business enterprises.

    1. Pre Payroll
      • It’s crucial to develop corporate standards early on to establish regular payroll procedures. Ensure these policies are clearly stated and approved by your firm’s management.
      • Based on established corporate policies and legal requirements, employers collect pertinent information for the pay period including how many years each person has worked with any paid breaks or short leaves, any employee adjustments, such as recruits, separations, pay raises, adjustments to profit deductions, and so on.
      • The procedure then moves on to the following step: examining the input data’s reliability and compliance with corporate guidelines. At this step, it is ensured that an active worker has not been omitted from receiving their wages and that no inactive worker’s wage has been paid by mistake.
    2. Actual Payroll
      • The purpose of the payroll management system at this phase is to ensure that the data is organized to process the payroll.
      • Employers determine the entire gross pay that each worker received during the working period and deduct taxes and other expenses to arrive at the employee’s net salary.
      • Employers submit their taxes and settle their paychecks within the designated deadline and handle any corresponding payments, including pay withholding orders.
      • In addition, sometimes businesses provide their workers with compensation wages or incentives.
    3. Payment Process
      • Having paid the worker completes the payroll procedure in India.
      • The purpose of the Payroll Management System in this step is to credit the salary to the employees either through digital channels or by physically transferring it through a bank.

    Post Payroll Management Procedure in India

    In addition to distributing payroll to all employees, salary slips and reports must also be created.

    First of all, you have to generate a payment slip for your employees through the Payroll Management Software digitally and distribute it to them. The corporate watermark and seal should be affixed to this document for distribution to employees.

    Make adjustments to taxes, PF, and other specifications by the end quarter. Once the taxes and deductions have been processed, they should be sent to the relevant departments.

    The enterprise has to file returns for this submission on a constant schedule. It could be done by producing forms and evaluating them, and cautiously supervising the computations with the accountant to arrange for these submissions.

    After completing all of these functions, maintain records for macro analysis. The records will allow you to easily organize your payroll and also your macro sales and promotion expectations.


    The article provides an overview of payroll management software, including its benefits and stages. The article also discusses the purpose of the payroll management system.

    If you want to learn more about the purpose of the payroll management system, you can contact Odint Consultancy. We’ll be there to assist you.


    Payroll management software is used to handle and manage employee salary payments in an organization.

    A payroll management system improves employee morale and ensures compliance with regulatory requirements. It is used to manage workers’ payroll, file employment taxes, and maintain accurate financial documents.

    Some payroll management techniques are-

    • Manual payroll management techniques
    • Software payroll management techniques
    • Outsourcing