Payroll for SMEs and Family Businesses: Excel to Payslips

In a family business, payroll is often one Excel sheet with a single salary figure per person, advances noted in the margin and a Diwali bonus decided on the day. It works until someone leaves, an inspector visits or the accountant who built the sheet goes on leave. Good payroll here gives every salary a proper structure, applies PF, ESI and professional tax where they apply, records advances and bonuses, treats relatives like other employees, and pays on time.

From one salary figure to a structure

A salary written as ₹18,000 needs to be split so that PF, gratuity and bonus are worked out correctly. The wage rule in the Code on Wages says basic pay plus DA must be no less than half of total remuneration. A simple split is basic and DA of ₹9,000, HRA of ₹3,600 and a special allowance of ₹5,400, which adds back to ₹18,000. The payslip then explains itself, and the salary calculator helps staff see their take-home pay.

PF, ESI and professional tax

Check whether PF and ESI apply to your establishment and to each employee, and register if you have not done so. Once registered, payroll deducts the employee's PF and ESI, adds the employer's share, and applies your state's professional tax. Decide with your adviser how PF and ESI apply to relatives on the payroll, and apply that decision consistently. The PF applicability and ESI applicability pages have the details.

Advances, bonus and relatives' salaries

Advances are part of life in a small business. Record each one and recover it in instalments as an advance recovery deduction: a ₹9,000 advance before Diwali can come back at ₹1,500 a month over six months. Pay the Diwali bonus through a bonus run so it is recorded, and check the statutory bonus rules for staff who are eligible. Relatives' salaries should match the work they do and go through the same payroll, with salary fields masked from other users.

Pay on time, with a record

Monthly wages are due by the 7th of the next month, and within two working days when someone leaves. Paying from a finalized payroll run by bank transfer, instead of cash envelopes, gives the business proof of payment and gives staff a payslip they can show a bank when they apply for a loan. The accountant also stops being the only person who knows how salaries were worked out, which matters the day that accountant is away.

How to set it up in ZeniaHR

Import your employee list from Excel through Data Import, then set each person's monthly gross and structure in Direct Payroll, keeping Basic and DA at no less than half of the gross.
Run the first payroll as a draft and check the PF, ESI and professional tax lines, employee and employer, before finalizing it.
Enter advance recoveries, incentives and arrears as monthly payroll inputs.
Pay the Diwali bonus through a bonus run, separate from regular salaries.
Give the accountant the Payroll Admin role and the owner the Company Head role, and mask salary fields for other users.

Roles this applies to

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Frequently asked questions

How do I move payroll from Excel to software?

Import your employee list, set each person's monthly gross and salary structure, and run the first month side by side with your old sheet. Compare net pay line by line, fix any differences in structure or deductions, and then switch. Keep the old sheets for your records.

How should relatives on the payroll be paid?

Through the same payroll as everyone else, with a salary that matches the work they do, an appointment letter and a payslip. Decide with your adviser how PF and ESI apply to them and apply it consistently. Mask salary fields so other users cannot see family salaries.

When must salaries be paid in a small business?

By the 7th of the month after the wage period, and within two working days when someone leaves. Close attendance and review payroll early enough that salaries reach bank accounts before the 7th, not on the last permitted day.