Placement and payroll consultant are going to introduce you to the basic concepts surrounding payroll and give you a brief suppose Joe is employee in (XYZ Pvt Ltd) Joe’s first payday Joe has just received his fortnightly wage let’s say that today Joe is receiving 800 kina how did that number get calculated well there are several factors that go into calculating the final total for Joe’s wage the money you receive is not just your hourly or salaried amount but also includes various allowances deductions and your contribution to their superannuation fund if necessary.
What is an allowance are any additional amount given to an employee from their employer for work-related expenses an example of an allowance is when an employer gives petrol money or a petrol allowance to an employee when they use their vehicle for work-related activities.
Allowances can be tricky some are included in wage and some are paid to a third party such as school fees or rent if your allowances are paid to a third party then they’ll be sent directly to the third parties bank accounts some allowances affect taxes and some don’t allowance before tax are included in the employees taxable pay these allowances usually represent some form of additional pay as compensation for working conditions or for a special skill taxable allowances are usually included in the gross salary column on the tax certificate for PA YE deduction certificate.
What is a deduction on top of allowances you also have deductions a deduction is any amount of money taken from your wage for various reasons, for example, a deduction an employee might have is if they decide to take out a loan from their company when they’re paying the loan back a loan deduction will be made from their wage every fortnight same as allowances some deductions affect taxes and some do not.
So when you’re looking at your wage here is what you’re seeing you see your wage or amount earned for your work plus all of the allowances taxable or not Maines all the deductions taxable or not now that you understand the concepts of allowances and deductions your payroll will make a lot more sense in order to really understand how payroll works you need to fully understand the following things superannuation contribution holiday pay leave money and work cover.
In addition to allowances and deduction, we also get the employers contribution to our superannuation. superannuation is also known as a retirement fund employees pay super as a deduction and this money although it is paid to an external super fund is still ours one way or another we or our survivors get this money back every single employee knows
How important their super is so it’s very important when doing the payroll management that you do to employers also pay super which does not affect the employees wage the money and employee pays to their super fund is joined with the money and employer pays to that same fund employers also pay for sick leave maternity leave where applicable and study leave where applicable we also get credit for holiday pay which is our money whenever we claim it by holiday or leaving the company and we also get long service leave money held for us if we work for any company long enough and finally we’re also insured by our company in India this is called work cover work cover helps us if we have an accident at work cover makes our company pay up if we’re hurt or injured on the job now we have our money what information goes where usually here’s where things go your net wages will go to your bank account or bank accounts or cash deductions will go against whatever they were for say a company loan you took or free cleaning your uniforms as we mentioned previously your superannuation both what you contribute as an employee and what your openi contributes as an employer goes to the superannuation company your taxes withheld will be sent to the tax office your pay slip will be given to you or emailed to you records of exactly what has happened will flow through the company’s general ledger so that everything gets tracked correctly.
Payroll is not exactly a simple process is it while it may be complex it is essential for your business that your payroll is running accurately and efficiently once you know what you’re doing and everything is accounted for your employees.
For more information about payroll please do not hesitate to contact us at Placement and Payroll Consultant. Don’t forget to check