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Topic : Payroll Method Calculation

A project Submitted to
University of Mumbai for Partial completion of the degree of
Bachelor in Commerce(Accounting and Finance )
Under the faculty of Commerce
By
Sanap Pragati Jayhind
Under the guidance of
Ms.Sonal Shinde.
Changu Kana Thakur Arts, Commerce and Science College,
Sector – 11, New Panvel-410206
Academic Year : 2019-20
Meaning

• A list of a company's employees and the amount of money


they are to be paid.

• The total amount of wages paid by a company.


Introduction

 A company's financial list of the salaries, wages, bonuses, net


pay, and deductions of their employees.

 Within a company, payroll is the combination of all of the


financial records of their employees salaries, wages, bonuses and
deductions.

 A payroll is a company's list of its employees, but the term is


commonly used to refer to the total amount of money that a
company pays to its employees. a company's records of its
employees salaries and wages, bonuses, and withheld taxes.
Objective to Study

i. To Study detail information about the payroll calculation.

ii. To know the different methods of payroll calculation.

iii. To understand the concept of payroll methods calculation.

iv. To study how to wages and salaries calculate in companys.


Features of payroll Method Calculation

 Payroll Management

 Leaves management

 Expense management

 Benefits, bonus management

 Income tax and deductions

 Time and attendance tracking

 Reports, payslips, forms

 Record - keeping
Functions of Payroll Method Calculation

a. Employees receive their salary.

b. Balancing and reconciling payroll data.

c. Depositing and reporting taxes.

d. The payroll department takes care of wage deductions, record keeping


and verifying the reliability of pay data.
Payroll Calculation Methods with formula

No. Method Formula


1) Daily Wage Method A) Monthly Gross Salary = (Net Daily Wage)*Present Days
B) Monthly Gross Salary = (Net Daily wage)*Present Days + WO

2) Total Days Method (TDM) Gross Salary = Net Salary * (Present Days + PL+WO+F)/Total Days in month

3) Work Days Method (WDM) Gross Salary = Net Salary * (Present Days + PL)/ Working Days in a month

Where,

WO = Weekly Off , PL = Paid Leaves , F = Festival Leaves


Payroll Calculation Methods with Examples

1) Daily Wage Method

A) Given :
Net Salary = 400 , Total days = 31 , Present days & Paid leaves = 22

Formula :
Monthly Gross Salary = (Net Daily Wage)*Present Days
= 400*22
= Rs. 8,800

B) Given :
Net Salary = 1,000 , Total days = 31 , Present days & Paid leaves = 21 , Weekly off = 3

Formula :
Monthly Gross Salary = (Net Daily wage)*Present Days + WO)
= 1,000*(21+3)
= Rs. 24,000
2) Total Days Method (TDM)

Given :
Net Salary = 10,000 , Total days = 31 , Working days = 27 , Present days & Paid leaves = 27 , Festivals = 0 , Weekly off = 4

Formula :
Gross Salary = Net Salary * (Present Days + PL+WO+F)/Total Days in month
= 10,000*(27+4+0)/31
= Rs. 10,000

3) Work Days Method (WDM)

Given :
Net Salary = 11,000 , Total days = 31 , Working days = 27 , Present days & Paid leaves = 25

Formula :
Gross Salary = Net Salary * (Present Days + PL)/ Working Days in a month
= 11,000*25/31
= Rs. 8,871
Need of Payroll Calculations

1) A payroll system is software designed to organize all the tasks of employee


payment and the filing of employee taxes.

2) These tasks can include keeping track of hours, calculating wages,


withholding taxes and deductions, printing and delivering checks and paying
employment taxes to the government.
Steps for Calculate Payroll

I. Notify Employees
II. Collect timesheets
III. Review and approve timesheets
IV. Enter hours worked
V. Enter wage rate changes
VI. Calculate gross pay
VII. Calculate net pay
VIII.Review
IX. Pay employees
X. Remit taxes
XI. Distribute pay.
Tools used for payroll calculations
1. ADP

2. Paychex

3. Patriot Software

4. Intuit

5. Gusto

6. Zenefits

7. Wagepoint
Techniques used for payroll calculations
1. Cash Method

2. Payroll Check Method

3. Direct Deposit Method

4. Debit Card Method

5. Manual System

6. Accountant

7. Payroll Software

8. Contracted Payroll Companies


Advantages of Payroll software

a. work out payroll calculations and deductions quicker

b. generate accurate payslips

c. calculate bonuses, expenses, holiday pay, etc with minimum effort

d. reduce the burden of compliance

e. store data such as payslips and annual reports in a secure, easily


accessible system
Disadvantages of Payroll software

1) data security, loss or theft

2) cyber security and fraud

3) information access, quality and control


Importance of payroll calculation
Why is payroll process important for any organization……….

i) Irrespective of the size of the organisation, payroll plays a huge role in maintaining the
morale of employees to the financial stability of the company.

ii) Typically processing of a payroll is time consuming and complex task.


THANK YOU !!!