How to close payroll every month

Reconcile before you lock

Reconcile the run against last month before finalizing. Headcount first: last month's count plus joiners minus leavers should equal this month's. Then gross pay. A Vapi chemical plant paid ₹48,60,000 gross to 180 employees in August 2026. In September, 4 joiners add ₹1,02,000, 3 leavers remove ₹84,000, revisions add ₹36,000, overtime rises by ₹22,000 and extra LOP takes off ₹18,000. Expected headcount is 180 + 4 minus 3 = 181, and expected gross is ₹48,60,000 + ₹1,02,000 minus ₹84,000 + ₹36,000 + ₹22,000 minus ₹18,000 = ₹49,18,000. If the run shows a different number, find the gap before finalizing.

The monthly close checklist

Use the same list every month, sign each line with a name and date, and keep the signed list in the month's payroll file. When an auditor or a new payroll executive asks what happened in a month, the list is the answer.

• Headcount and gross reconciled with last month, with differences explained.
• Run reviewed, finalized and locked against edits.
• Payslips issued to every employee.
• Salaries credited by the 7th of the following month, and leavers paid within two working days of exit.
• Bank credits confirmed, with failed transfers followed up the same day.
• PF, ESI, professional tax and TDS deposited, and returns filed by their due dates.
• Payroll summary and cost by department shared with finance.
• Inputs, approvals, reports and bank confirmation stored in the month's file.

Statutory payments and filings

Each statutory contribution has its own due date and return. Put them in a calendar with owners, and link each payment to the finalized run it came from, so the challan amount matches the payroll register. The statutory compliance calendar lists the dates that apply, and your state's professional tax schedule needs its own check because it differs from state to state. If a payment is ever late, record why and what was done, because inspections look at patterns as well as single delays.

Controls that keep months clean

Separate the roles: the person who enters inputs should not be the only person who approves the run or releases payment. Lock finalized runs, so changes after the close go into the next month as adjustments with a reason, never as quiet edits. Keep access to salary data limited to those who need it. Once a quarter, review the close itself: which inputs arrived late, which errors reached payslips, and what changed in the process to prevent them from happening again.

Step by step

1. Reconcile headcount and gross. Explain the change from last month by joiners, leavers, revisions, overtime, arrears and LOP before the run is finalized.
2. Finalize and lock the run. Finalize so nobody can edit it afterwards. In ZeniaHR, finalized Direct Payroll runs are sealed and read-only.
3. Issue payslips. Send every employee a payslip. ZeniaHR produces a payslip PDF for every employee, which employees can also download in self-service.
4. Release and confirm payments. Release the bank transfer and confirm credits, following up failures the same day. ZeniaHR's payment batches move from draft to approved to paid.
5. Deposit statutory dues. Pay PF, ESI, professional tax and TDS by their due dates and file the returns, matching each payment to the finalized run.
6. Share reports with finance. Send the payroll summary, cost by department and statutory liabilities to finance. ZeniaHR's reports cover payroll, PF, ESI and statutory registers, with CSV export.
7. Store the month's file. Keep inputs, approvals, the signed checklist, reports and bank confirmation together, so any month can be explained later.
8. Carry late changes forward. Anything found after the close goes into the next run as arrears or an adjustment, with a note linking it to this month.

Frequently asked questions