4/2/2018 how to do Step by step payroll Accounting in Tally erp 9

how to do Step by step payroll Accounting in Tally erp 9

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how to do Step by step payroll Accounting in Tally erp 9 : Sample Example for doing payroll in tally ERP 9

What do mean by Payroll : The total wages not including benefits , paid by business during each forecast year.The term refers to a series of accounting
transaction involved in the process of paying employees for the service rendered after taking all the statutory and non statutory deduction into account, in
conformance with the term of employment .company policy and the law of the land ie payment of payroll taxes insurance premiums,employee benefit and
other deductions .An efficient payroll system facilitates an error free accurate and timely employee payment while ensuring that the employment is well with
in the valid work permit.

Salient features

It is fully integrated with accounts to give you the benefits of simplified payroll processing and accounting.
It has user defined classification and sub classification for comprehensive reporting this may be related tot he employees employee groups pay
components departments etc.
It provides the facility to create user defined earning and deducting pay heads.
It allows flexible and user definable of masters.
It supports user defined production units ie attendance production time based remuneration.
It provides a flexible processing period.
It provides comprehensive cost centre as well as employee wise costing reports.
It ensure an accurate and timely salary processing employee statutory deduction and employer statutory contribution with the help of predefined
process.
It facilitates an accurate computation and deduction of esi,epf professional tax gratuity etc.
It helps in generation of statutory forms and challans for EPF and ESI as prescribed.

Mr Aviansh Started business with the name with Aviansh Tech Industries on 1 april 2015.Which will produce Generator and has three functional area to
perform his business smoothly.

1. Administration
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2. Production
3. Sales

Now Mr Avinash has hires personnel for these department and wants to automates the payroll process to ensure the smooth running of operations.Mr
Aviansh wants to calculate the salaries of employees on the basis of attendance.

Now to start the company

Go to gateway of tally > Company info > Create company

fill the details of company and press YES
Press F11>Features >Accounting Features F1
Set maintain payroll to YES
Set more than one payroll cost category to YES allow you to maintain more than one cost category

Example :

consider a company having more than one branch under the common head office The head office maintain the payroll for all the branches here tally
provides cost category creation for all the branches with there name and now under this cost category you can defined employee name and details and
maintain payroll separately.

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go to gateway of Tally>F12>payroll configuration

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Now Avinash Started business with cash Rs 15,00,000 and paid into bank Rs 500000.
Now following Ledger need to be prepared and Voucher entry need to pass into Accounting Vouchers.
Capital A/c (under Capital Account)
SBI bank (Under bank account)
Now Gateway of tally > accounting Voucher > F6 receipt
Credit : Capital A/c 15,00,000
Debit : SBI Bank A/c 500,00
Debit : Cash A/c 10,00,000

After starting the business Avinash employed following staff in his organization :

Pay Head Amit Manish

Basic Pay Rs 10,000 per month Rs 8000 per month

HRA 40% on Basic pay 40% on Basic pay

Conveyance
Rs 800 flat per month Rs 1000 flat per month
allowance

As per law ie 1.75% on total earning

Variable pay As per performance evaluation
before any deduction

ESI/Payable( As per law ie 1.75% on total earning As per law ie 1.75% on total earning
employee before deduction before deduction

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contribution )

EPF (employee
As per law ie 12% on basis pay As per law ie 12% on basic pay
contribution)

AS per law ie 12% on basic pay As per law ie 12% on basic pay

ESI (employer As per law ie 4.75% on basic HRA As per law ie 4.75% on basic HRA
contribution) ,conveyance and variable ,conveyance and variable

EPF (employer FPF As per law ie 8.33% on basic pay or ts As per law ie 8.33% on basic pay or ts
contribution 541 whichever is less 541 whichever is less

EPF(employer As per law ie 3.67% on the basis of FPF As per law ie 3.67% on the basis of FPF
contribution) contribution by the employer contribution by the employer

Gratuity As per law As per law

Professional tax As per law As per law

create group :

Employee cost under indirect Expenses :

Note the creation of this group helps in quickly ascertaining the total cost incurred toward employees as salaries :

Got to gateway of tally > Accounts Info > group > create to view the group creation.

screen .

Ensure that the group creation screen display as shown.

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Similarly create employee contribution under indirect expenses

Attendance is used to record attendance and production data.

Based on the component (pay head) structure you can define multiple attendance /production types.

examples :numbers of days present number of days absent and numbers of hours contributed .The variable data is entered in the attendance voucher for
the payroll period.

The attendance production type may be attendance leave with pay .Leave without pay if salary is to be paid based on number of days attendance ) paid
leave ,absent The production type can be based on Piece production overtime hours and so on.

Create attendance /production type:

Absent under primary

Go to gateway of tally > payroll info > attendance production type > create

1. name :absent

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2. under : primary
3. attendance type : leave without pay
4. period type : days display automatically

note : Tally display period type as days because attendance usually accounted for on the basis of the lowest period.

attendance / production type screen display as

Pay head in payroll :

Salary component constituting pay structures are called pay heads.

Go to gateway of tally > payroll info > pay head > create
name : Basic pay
Pay Head type : earning from employees
under : Employees cost
appears in Payslip : YES
Name to appears in pay slip : Basic
Use of gratuity: yes
Calculation type : on attendance
attendance /leave with pay not attendance: not applicable
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leave without pay : absent

calculate period : months
Per day calcuation basics :user defined
month of : 30 days
rounding methods : normal rounding
limit : 1

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Create pay head for house rent allowance :

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1. Name : Conveyance allowance

2. Pay head type :earning for employees
3. Under : employee cost
4. Appears in payslip : yes
5. Name to appears in payslip : Conveyance
6. Use for gratuity : No
7. Calculation type : Flat rate
8. Calculation period : Month
9. Rounding method normal rounding
10. Limit : 1

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Create pay head House rent Allowance

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1. Name : House Rent Allowance

2. Pay head Type : earning for employee
3. Under : Employee Cost
4. Appears in Payslip : YES
5. Name to appear in payslip :HRA
6. Use of gratuity : No
7. Calculation Type : As computer Value
8. Calculation period : Month
9. Rounding method normal rounding
10. Limit : 1

Complete on specified formula

ensure that the compute on specific formula screen display as shown:

Create Pay Head Variable Pay

1. Name : Variable Pay

2. Pay head Type : earning for employee
3. Under : Employee cost
4. Appears in Pay slip : YEs
5. Name to appear in Pay slip : incentive
6. use for Gratuity : No
7. Calculation Type : as under defined value

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variable payhead in payroll tally

Create Pay Head ESI Payable (Employee contribution)

1. Name : ESI Payable (Employee contribution)

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