Managing payroll efficiently while ensuring compliance with Provident Fund (PF), Employee State Insurance (ESI), and Professional Tax (PT) is a challenge for startups. Delays or mistakes can lead to penalties and unhappy employees. Here’s how startups can simplify payroll and stay compliant.
- Understanding Payroll Compliance Requirements
Startups with employees must adhere to:
- Provident Fund (PF): Applicable if you have 20+ employees; contribution is 12% of basic salary each from employer and employee.
- Employee State Insurance (ESI): Mandatory if employee salary is below ₹21,000/month; employer contributes 3.25%, employee contributes 0.75%.
- Professional Tax (PT): Levied by state governments; applicable based on salary slabs.
- Common Payroll Mistakes Startups Should Avoid
- Delaying PF/ESI deposits: PF should be deposited by the 15th, and ESI by the 15th of the following month.
- Incorrect tax deductions: Ensure TDS on salaries is calculated correctly.
- Missing payslip and compliance reports: Employees need payslips with breakup of earnings, deductions, and tax calculations.
- How to Automate Payroll for Accuracy
- Use payroll software integrated with PF, ESI, and TDS calculations.
- Automate salary disbursement with direct bank transfers.
- Ensure seamless tax filing and compliance reports generation.
- Filing Returns and Compliance Reports
- PF Returns (Form 5, 10, 12A, 3A, 6A): Monthly and annual returns.
- ESI Returns: Half-yearly returns to be filed by 11th May and 11th November.
- Professional Tax (PT) Filings: Varies by state; monthly or annual filing required.
- Get Expert Payroll Management for Your Startup
Payroll compliance doesn’t have to be stressful. Need help managing PF, ESI, PT, and salary processing? Let our experts handle your payroll while you focus on growing your business!
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