Payroll

Overview

Calculates salaries, taxes, and deductions, generates payslips, and streamlines payroll runs.

Key concepts

Key terms, statuses, and records that appear in Payroll in XFatora.

Setup & prerequisites

Connect required settings, templates, and defaults for Payroll in XFatora.

Roles & permissions

Assign role-based access, approvals, and visibility for Payroll in XFatora.

Main workflows

Payroll module

handles the entire process of compensating employees, from configuring salary components and deductions to generating payslips and maintaining payroll records. It automates what would otherwise be a very time-consuming and error-prone process, ensuring that employees are paid accurately and on time and that your company remains compliant with tax and labor regulations. Below is how to set up and run payroll in the system.

Payroll Configuration and Setup

Employee Data Integration:

The Payroll module draws basic employee information from the People Records (HR) module. Ensure each employees profile includes important payroll info: their hire date, job role, and most critically their

salary details

. In their People Records profile or in the Payroll modules employee settings, enter each persons salary structure e.g., base salary amount (monthly or hourly rate), any allowances or bonuses, and relevant deductions (like health insurance premiums if employee-paid, or retirement contributions). Also record each employees tax ID or social security number if needed for payslips.

Pay Schedule:

Define your pay periods (e.g. monthly, bi-weekly). In

Payroll Settings

, set whether you run payroll monthly on the 30th, or every two weeks on Fridays, etc. You can have different schedules for different groups if needed (though that adds complexity). Commonly, all employees are on the same cycle (say, paid on the last day of the month for that months work). Mark the schedule in the system so it knows what date range constitutes a payroll period and the associated pay date.

Earnings & Deductions Structure:

Set up the various components that can appear on payslips, categorized as

Earnings

or

Deductions

. For example:

Earnings:

Basic Salary, House Allowance, Commission, Overtime, Bonus, etc. Each earning type can be configured as taxable or non-taxable. For instance, basic salary is taxable, maybe a travel allowance is non-taxable if local laws permit.

Deductions:

Tax Withholding (like income tax or PAYE), Social Security, Health Insurance, Retirement Fund, any company-specific deductions (e.g., loan repayments if employees took advances). For each deduction, set whether its a fixed amount or a percentage of something (e.g., tax might be computed via brackets, insurance might be a fixed % of salary).

Input the rates/amounts for each element. The module may allow setting up tax brackets in a table form fill those in according to your jurisdictions tax law. For example: 0% on first $10k, 10% on next $20k, etc. Also configure any tax rebates or credits if applicable. Similarly, define company contributions (like employers share of social security) as separate items under company contributions list, which the payroll will calculate but not deduct from net pay (instead, its an additional cost to the company).

Link to Accounts:

In settings, map each payroll component to the corresponding accounting accounts. For instance, salaries expense to Wages Expense account, tax deductions payable to Payroll Taxes Payable liability account, etc. This way, when payroll is run, it can post a summary journal entry automatically (if the system supports that integration). If not automatic, youll use these mappings to manually record payroll expenses. Setting it up now ensures you know where numbers go later.

Running the Payroll Process

Gather Time/Attendance Data:

If you have hourly workers or use the Time & Attendance module, ensure all timesheets or attendance records for the period are finalized. The Payroll module can integrate with Time & Attendance to fetch hours worked or overtime. For example, an hourly employees total hours from the timesheet will multiply by their rate to yield gross pay. Overtime hours (if any) might be calculated at a premium (like 1.5x regular rate). Verify all such data is correct before proceeding. The integration setting might be called

Integrate Timesheets data

enabling it will automatically incorporate actual working hours into payroll calculations (which is great for precise pay).

Process Payroll for Period:

Go to

Run Payroll

or the current pay period in the module. The system will list all active employees and compute their pay. For each employee:

Calculate gross earnings: base salary (prorated if needed for partial month), plus any additional earnings (commissions, bonuses). Some earnings might require input each period e.g., if you give monthly sales commission, youd enter the commission amount for those employees before finalizing. You can either import these from a spreadsheet or input on the payroll screen (the system might show editable fields for any components that are marked as variable).

Calculate deductions: using the configured rules, the system will compute tax withholding based on gross pay and tax rules. It will also calculate fixed deductions like insurance premiums. If an employee has any one-off deductions this period (maybe they took an unpaid leave day, or need to repay a loan installment), you can enter that as an adjustment.

Company contributions: it will also calculate employer side costs (for your reference/accounting) like employer social security.The module often presents this in a table where each row is an employee and columns or drill-down shows breakdown. Check each employees line for any glaring issues (e.g., someones overtime didnt get included, or tax looks off perhaps they hit a new bracket; verify with a quick manual calc if needed).

Payslip Generation:

Once everything looks correct, generate payslips. The system will create a payslip document for each employee, detailing their earnings, deductions, net pay, and employer contributions (some payslips also show YTD totals). You can review all payslips at this stage. If any employee has anomalies, you can still correct and re-run just for them if needed.

Approval Step:

Depending on your internal controls, you might have a manager or finance head review the payroll summary before finalizing. The module might allow an

Approval

feature e.g., mark payroll as Pending Approval and then Approved. Or you might simply export the summary to share for sign-off. Only after approval should you proceed to execute it.

Finalize and Lock:

Finalize the payroll run for that period. This locks those calculations and flags that these payslips are official. At this point, the data often becomes read-only to avoid changes after paying people (if a post-final adjustment is needed, youd handle it in a subsequent payroll or via special correction entry). The module likely moves the status of payroll to

Processed

or

Completed

.

Paying Employees and Payslip Distribution

Payment Methods:

Decide how employees are paid via bank transfer (most common), check, cash, or mobile payment. The Payroll module can track payment status. For example, after finalizing, you may mark each payslip as

Paid

once the bank transfer is done. If integrated, you could even generate a bank payment batch file from the system containing all direct deposit instructions for that payroll. If not, youll manually use your banks system to pay each or upload a list. Once you confirm the money has left your account, come back and mark payroll as paid in the system for record-keeping.

Payslip Access:

Distribute payslips to employees. The module provides a secure way to do this:

Employee Portal:

Often employees can log into a self-service portal to see their payslips (and maybe prior payslips too). This is convenient and secure. Announce to staff they can view their latest payslip on their portal as of payday.

Email Payslips:

Alternatively, the system can email each employee their payslip (typically as a PDF attachment). You might protect these PDFs with a password (like the employees ID or something) for confidentiality. Ensure employees know the password scheme if so. The email approach is quick but be cautious to use official work emails and secure PDF if possible, to maintain privacy.

Print Hardcopies:

In some cases or jurisdictions, you might need to provide printed payslips. The module can bulk-generate PDFs which you then print. Each payslip will have the company name/logo, employee name, pay period, breakdown of earnings and deductions, net pay, and possibly cumulative totals. Print and seal them if required.

Handling Queries:

After distribution, be prepared to answer employees questions. The payroll modules clarity helps if someone asks Why is my net pay different this month?, you can open their payslip in the system and go through line by line. Perhaps their overtime was less or a new deduction kicked in (like they passed a taxable threshold). Having everything systematically calculated with formulas helps justify the numbers.

Post-Payroll Activities

Accounting Entries:

With payroll finalized, ensure the accounting side is updated. If integrated, the system might have already created a

journal entry

for total payroll. For example, it will debit the various expense accounts (Salaries, Employer Taxes, Benefits, etc.) and credit cash (for net pay paid out to employees) and credit liabilities for withholdings (like tax payable, social security payable amounts that you owe to the government on behalf of employees). Verify this entrys correctness. If the system doesnt automate it, youll need to make a manual journal:

Debit Salary Expense (total gross wages)

Debit Employer Contributions Expense (like employer social security)

Credit Cash/Bank (total net paid to employees)

Credit Tax Payable (sum of all income tax withheld)

Credit Social Security Payable (employee portion withheld + possibly employer portion, depending on how you structure it)

Credit other payables for any other deductions (health insurance premiums to remit, etc.)After posting, your P&L will show the salary and related expenses, and your balance sheet will show liabilities for amounts you need to pay out (to tax authorities, benefit providers). Those liabilities will be cleared when you actually pay those parties.

Tax and Contributions Remittance:

The payroll module keeps track of cumulative withholdings. Use its reports to know how much to remit for payroll taxes and insurance. For example, every month or quarter you may need to send the withheld income taxes to the government. The

Income Tax Payable

account (and similarly social security payable) from accounting tells you the amount. The module might also have a specific report like

Monthly Tax Summary

showing: Income Tax withheld = $X, Social Security = $Y (employee) + $Z (employer) = total $W. Pay those by the deadline. After paying, record the payment in accounting (debit the payable, credit cash).

Payslip Adjustments or Corrections:

If you find an error after processing (say an employees overtime hours were undercounted), many systems advise to correct it in the next payroll (by giving a one-time earning addition for the difference). However, if its serious, you might void and re-run the payroll for that one person if the period is still open. The module likely has a way to handle retroactive adjustments. Always document any adjustments either on the payslip notes or internal notes so the reasoning is clear.

Employee Records Updates:

Sometimes payroll processing highlights changes needed in HR records. E.g., an employees tax code might change (maybe they moved to a different state or their personal allowances changed affecting withholding). If they submit new tax forms (like an updated W-4 in the US), update their profile and the Payroll modules settings for them so that next payroll the calculation uses the new info. Another example: an employee gets a raise effective next period enter that new salary amount in their profile once approved, so it reflects in the upcoming cycle.

Payroll Reports and Compliance

Payroll Register:

After each run, generate a payroll register report a list of all employees paid, their gross, deductions by category, net, etc. This is essentially the detail of the payroll run and is useful for review and record-keeping. Keep these registers securely, as they are confidential financial records.

YTD (Year-to-Date) Reports:

The module tracks year-to-date totals for each employee (and overall). You can run a YTD summary to see how much each person has earned so far this year, and taxes deducted, etc. This is helpful mid-year to project annual tax payments or when an employee hits a threshold (e.g., FICA Social Security in the US has a cap; the system will stop deducting after the wage base is reached, which youd notice in YTD).

Tax Forms:

For year-end, you often need to produce tax forms for employees (like W-2 forms in the US, T4 in Canada, etc.). The Payroll module may have a feature to generate these forms or at least a report with needed info (total wages, total tax, etc.) which you can use to fill official forms. Check compliance features: some systems can e-file or print the governments format. Ensure you reconcile all payrolls and run a final year-end report to verify totals before creating these forms. Its crucial that the sum of all payslips equals whats reported to the government.

Leave and Benefits Integration:

If employees have paid leave, the payroll can integrate with Time Off so that if someone took 2 days unpaid leave, the payroll reflects a deduction for those days. Conversely, if someone has a paid vacation bank, you might want to track how many days were paid out. The People Records/Timesheet modules might handle leave accrual, and Payroll just knows how many unpaid days to deduct if any. The integration often needs a manual step where HR informs payroll of any unpaid time. Set a procedure: before payroll, HR provides a summary of any unpaid leave or other adjustments for each employee, which you input into the payroll module as part of earnings/deductions adjustments.

Confidentiality and Security:

Payroll data is sensitive. Use the modules role permissions to restrict access. Typically, only HR and Finance managers should access full payroll info. Ensure other employees cannot see each others pay (aside from their own). The system should by default restrict payslips to the respective employee and admins. Also, secure the data backups payroll records should be backed up but encrypted if possible, and retained per legal requirements (often several years).

Audit and History:

The Payroll module keeps an audit trail of any changes to payroll configurations (like if tax rates were updated or someone edited a past payroll). If auditors ask, you can provide reports from the system. For example, an auditor might want to see that all payslips match the bank transfers; you could show payroll registers and bank statements. Because the module ensures calculations are formula-driven and consistent, it reduces risk of manual errors a plus in any audit.

By implementing the Payroll module, you transform payroll from a headache into a streamlined routine. It integrates data from attendance and HR, applies complex calculations uniformly, and produces professional payslips and reports. This results in happy employees (paid correctly, on time) and satisfied regulators (accurate filings and records). Always keep the systems settings up-to-date with any law changes (tax rates, contribution rates, minimum wage, etc.) and you will find payroll runs can be done with just a few clicks each period, even as your team grows.

Screens & fields reference

Use these screens and fields to complete tasks inside Payroll in XFatora.

Automations & notifications

Review automation rules and notifications available in Payroll in XFatora.

Reports & dashboards

Track KPIs and dashboards powered by Payroll in XFatora.

Common mistakes

• Skipping required configuration before the first workflow.
• Not assigning the correct permissions for team roles.
• Forgetting to review automation or notification settings.

FAQs

Troubleshooting

Related modules