When you hire someone to work for you, you are well aware of the fact that you have to pay for this work. And if you are working for someone else, you also get paid. Similarly, if you are an owner of a company or running some sort of business, you cannot do everything on your own. You have to hire some employees and pay them accordingly to run your business.
Payroll is the net and the fixed amount that you have to pay to your employees every month or depending on their salary period. You have to manage payrolls every month and keep their records. You have to calculate the salary of each employee and then have to pay it after certain deductions.
You either do it by yourself or hire someone to do all the payroll management work for you. However, it is recommended to take the help of a payroll software program. Top organizations have such a system in place to calculate and deposit salaries automatically every month after making the required deductions or adding bonuses. You can easily use payroll software for a bank, hotel, educational institute, or any other type of business you run.
Based on various things such as salary period, deposition method, etc. there are different types of payroll management methods.
Types of Payroll Management based on Salary System
Depending upon the salary method, there are three types.
- Hourly wages are one of the most popular methods for laborers and other similar types of employees. It involves the calculation of the total hours an employee worked and then these are multiplied with the salary per hour. It is a difficult method as well because you have to calculate the working hours of each employee manually and overtime hours as well to calculate their salary.
- The next one is salary based payroll management system. It is considered as the ideal method of payroll management as you don’t have to calculate the salary every month. You have to simply keep the record of the salary of each employee and pay it at the end of every month.
- A commission-based salary system is also a popular payroll management method. It might only include commission when you hire someone only for a certain target. However, when you give a commission-based target to one of your current employees, you have to add that commission to their salaries.
Types of Payroll Management Based on Payment/Deposition Method
When it comes to paying the salaries or wages of your employees, the payroll management method is split into the following types.
- The first type is to hand over the cash to the employees, which is their salary at the end of each month. It might be the oldest way of paying your employees. Similarly, it also involves paying the salary checks to the employees as well.
- The next type based on the deposition method is direct deposition into the accounts of your employees. It is one of the commonly used methods in the public and private sectors. The bank account details are taken from the employees when they get hired by you, or separate accounts opened for each of them and their salaries deposited in those accounts.
Types of Payroll Management Methods Based on Managing System
Depending upon the way you manage your specific payroll management, there are the following types.
- The first type is manual management. It is usually done by the employers or someone hired by them. It is the traditional method and requires a lot of effort along with more chances of mistakes.
- The next type is doing so automatically. You can use different payroll software programs for that purpose. It requires almost no effort and there are very few chances of mistakes.
We hope that this article has helped you know about the types of payroll management methods. You can now choose the one that suits your business the most and help you to efficiently manage your payroll system at the end of every month. But, when it comes to selecting payroll software, your best bet is to rely on Netchex. It’s affordable, easy to use, and comes with many advanced features. Give it a try!