Payroll and Compliance Troubles for Mid-Sized Companies

Mid-size companies are in a buffer state of the market. They have high anticipation for growth and aim for rising turnovers. Mid-size companies also have an additional challenge of huge competition from a wide array of competitors. These companies use all their energy to deliver the best results possible because they do not wish to lose their station. 

Out of all the troubles a mid-size company faces, payroll processing and compliance with laws can be excessively avoidable. They can concentrate more on broadening their business if their HR and payroll processing teams are well-versed in the varying taxations and local laws. 

What exactly are the troubles mid-sized companies face in payroll and statutory compliance? Let us know them.

Taxation Errors

It is common for companies to misclassify their employees which leads to errors in the taxes applicable to them. Every employee has a distinctive payroll based on experience, tenure, income, benefits, etc. 

Companies need to deduct the following taxes from gross salary:

  1. Professional Tax

  2. Income Tax

This enables the employee to file for a TDS return. If the wrong taxes are applied the company lands in legal trouble and has to pay penalties. This is a waste of money and should be strictly prevented. Under the section of income tax, a late filing of a TDS return is liable to tax penalties. Therefore, tax returns should be filed before the deadline. 

Missing Obliging Leaves

Under amendments to the maternity act, women are entitled to maternity leaves. They can opt to work from home and are authorized to receive benefits for the same. It is an obligating human right for female employees and failure to comply with the act can encounter legal notice from the employee. 

The benefits are appropriately added during payroll processing. Taxation is also applicable to these benefits. A careful effort should be made for such calculations.

Mistaking Contractors and Employees

In today's world of freelancing, many skilled individuals work in companies for a short span on a contractual basis with an unfixed income. Interns also work for the company for a short span. Many organizations offer jobs after the employee has shown their prowess in the observation period. Therefore, errors are prone to occur in identifying the stature of each employee. 

The payroll processing team has to be very meticulous in calculating their payrolls. They have to differentiate employees who are exempt and non-exempt from the taxes.

Provident Funds, Insurance, and Allowances

Every employee and employer pays a percentage of the income to a provident fund of the employer. The company is expected to do so for the welfare of the employee when they retire. 

The company is also expected to deduct medical insurance and other allowances (travel, internet, housing) from the employee's salary. These deductions are governed by the law to protect worker rights. 

Disorganized Records

A lot of things are going on in a mid-size company at a certain time. New candidates are hired, old ones retire, and some people get terminated while others resign. Employees may be enjoying a vacation, having a medical emergency, working from home, overtime, etc. Some employees work on holidays and get compensatory off on idle working days. 

All this data should be kept in an organized manner. A systematic order of all information reduces chaos and can be easily found. This is not possible with a regular Excel timesheet and hundreds of sheets need to be maintained. 

If only one department is responsible for every aspect listed above, there is a high possibility of fallacies. The company can repetitively face litigations that consume a lot of time and resources. Hence, a third party of experts should be roped in to handle all these tedious tasks. 

How Paysquare manages your payroll?

Paysquare specializes in payroll processing which is the necessity of the era. As new companies are sprouting up, we assist you to overcome all your payroll and compliance troubles. With the help of Paysquare, you use modern technology without even investing in it for your payroll process. We aim to give your company a push in the growth trajectory and release the compliance-related pressure from your shoulders. 

For more information to visit our website — https://paysquare.com/

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