Payroll Process checklist | Free template download in Excel and PDF
12 minutes read

Payroll Process checklist | Free template download in Excel and PDF

Hello, in this blog we will look at the steps that you need to go through for the monthly payroll process and provide you the payroll processing checklist.

These are the steps included which we will look at in detail in the next section.

Payroll processing is a huge and crucial part of the organisation. This includes the processes of not only salary calculation and disbursement but also related processes such as benefits management, statutory compliance and more. There are also many variables such as location, details of the employee, salary, leave, reimbursement and other pieces of information which have to be collected for processing Salary on time without any errors. Sometimes, it all becomes a bit overwhelming. Having a checklist handy will help you navigate the payroll process easily.

We have also created a free checklist template in Google sheets which you can use to keep track of your monthly payroll processing. You can find it here

Payroll Processing Checklist

Before you start the payroll processing, ensure that you have all the accurate data of the employees in case of any inconsistency.

Below, there you can follow the checklist that ensures you are going right.

1. Lock previous period payroll:

Before starting the new payroll, locking the previous month’s payroll will ensure that there are no errors or disturbances while payroll processing for the current month is in process.

2. New employee additions:

Here you have to update all information about the new employees, such as

  • Name and address of the employee
  • Whether they are working or not, if working then, independent contractors or employees according to law.
  • EIN or social security number of the employee
  • Information of tax
  • Rate of pay
  • Bank details
  • Insurance

3. Confirmation updates:

Confirmed employee details have to be updated in the current payroll process in case of salary changes or other benefits because of confirmation.

Information of current employees

  1. Address changes
  2. Job title changes
  3. Benefits changes
  4. salary changes
  5. Employment status changes
  6. Tax withholding changes
  7. Terminated or dismissed

4. Update salary revisions, if any

Ensure the salary details of the employees and update whose salaries have been changed. Such as gross pay, bonus, commission, retroactive pay and others.

5. Calculation of PF and ESI:

Monthly calculation and deduction of PF and ESI of the employees. Based on the rules and policies of the EPFO.

6. Update one-time payments:

Here you have to update the one-time payment of the employees. Such as overtime, bonus, incentives and other payments.

7. Update any other salary changes:

Any other components have to be updated. The relevant salary can be updated here.

8. Update Arrears:

If there have been any salary revisions which are effective from a previous date, then the arrears due will need to be calculated. With this option, you can be sure that arrears calculation has been started.

9. Update Leaves:

Here you can update the number of leaves, such as LOP, LWP, CL and others. That will show the absence and presence of the employee, and the day’s pay needs to be calculated. There may be a case of LOP reversal that needs to be calculated.

10. Update Full and Final settlements:

In that, you can update the full and final settlement of those employees who are marked as separated or as part of the month’s payroll.

11. Collect proof for TDS and reimbursements

Proof for TDS –

  • ELSS investment proof
  • Receipts of Health Insurance and Life Insurance
  • If any investments under section 80C

Proof for Reimbursements –

  • Proof of LTA
  • Receipts of rent for your accommodation
  • Invoices, if any
  • Receipt of Donation, if any

12. Allot Reimbursement claims:

Make sure that the reimbursement claims submitted throughout the month have been reviewed. Then only it will be considered for the month’s payroll.

13. Confirm and Lock IT declaration:

Just ensure that the IT declaration is locked to prevent the employees from declaring this during the payroll processing.

14. Integrate IT declaration in payroll calculation:

Once the IT declaration is locked, it has to be downloaded to incorporate it into the payroll. Make sure this is done.

15. Calculate monthly salary

Here you have to calculate the right amount for the employees based on all income and deductions and have to transfer the amount to the employees’ accounts.

16. Generate payslips and disburse via email or hardcopy

As an income proof, you need to generate payslips of the employees and disburse via email or have to give a hardcopy in hand with seal & sign.

17. Statutory payment and filing

Under the statutory payment, you have to make payments towards PF, ESI, PT & TDS as well as file their returns.

Benefits of Payroll Process Checklists

There are some benefits of payroll process checklists, such as –

  • It helps to make the process easy and effective.
  • It saves time and standardizes your payroll process.
  • Streamline your payroll process, making it error-free

This is the end of our discussion on the payroll process checklist. Let’s know your other questions and opinions on this topic. Mention below the comment box.


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