Payroll is the module where configuration is the product: every amount a run computes and every account it posts to comes from data an administrator set up. This page is the reference checklist — what must exist before the first run, per legal entity, and what each piece controls. Work it top to bottom; the order matters because later pieces reference earlier ones.
1. Control accounts
Posting resolves liability accounts by control type on the company's GL accounts. Configure one account per type the company uses:
| Control type | Used for |
|---|---|
| Payroll Payable | Every employee's net pay (per-employee open items), full-and-final net settlements, payroll-settled expense claims |
| PF Payable | Provident-fund deductions and employer contributions; the PF challan clears it |
| ESI Payable | State-insurance amounts; the ESI challan clears it |
| Professional Tax Payable | PT deductions; the PT challan clears it |
| Salary TDS Payable | Income tax deducted on salary; the period TDS challan clears it |
| LWF Payable | Labour welfare fund amounts; the LWF challan clears it |
| Employee Loan / Employee Advance | Disbursed loans and advances; payroll recoveries clear them |
| Bank | Salary payouts, challan deposits, loan disbursements |
Also set the company profile's default bank GL account if the company holds more than one bank account — the salary payment batch derives its bank from it, and several banks with no default is a deliberate error, not a guess. See Chart of accounts for the account model.
2. Payroll components
The component catalog defines every pay element once: component type (Earning, Deduction, EmployerContribution, Reimbursement), taxability, calculation type, statutory type where applicable, proration and display flags, sort order — and the GL mappings posting depends on:
- Earnings and reimbursements: an expense GL account (debited).
- Deductions: a payable GL account (credited).
- Employer contributions: both — expense debited, payable credited.
A component used in a run without its required mapping fails the post by name. Map accounts at component level; every structure using the component inherits them.
3. Salary structures
Per pay population, a structure with ordered component lines: calculation type and value (fixed, or a percentage of CTC or of a named earlier component), optional min/max clamps, proration flags, effective dates. Sequence matters — a percentage-of-component line must come after the component it references. See Employees and salary structures.
4. Employees and compensation
Each person on payroll needs an employee record (payroll company, statuses, tax regime, statutory applicability flags) and an active compensation record naming their structure and CTC. Bank account, IFSC, PAN and UAN belong on the person record — the payment batch and statutory filings read them from there.
5. Payroll periods
One period per pay cycle, with start and end dates (they drive proration and attendance), the pay date (it becomes the accrual's posting date), and the frequency. Statutory challans and the TDS projection are keyed per period, so create periods deliberately rather than ad hoc.
6. Statutory rule tables
Per legal entity, effective-dated: the PF rule (wage ceiling, rates), the ESI rule (wage threshold, rates), professional-tax slabs per state (with the February variant where the state has one), and LWF rules per state (fixed amounts, frequency). Mechanics on the statutory page. All amounts and rates are your data — nothing statutory is hardcoded.
7. Income-tax rule tables
Per financial year and regime: the regime rules (standard deduction, rebate parameters, surcharge cap, cess, rounding unit, what the regime allows), salary tax slabs (with age bands for the Old regime), surcharge slabs, and the deduction section masters (ceilings, senior variants, regime availability, aggregate cap groups). Rows without a company scope act as a shared pack for every legal entity, with company-specific rows overriding — ship one pack, override only where a company genuinely differs. If a financial year's tables are missing, TDS projection skips rather than guesses — seed the new year's tables before its first April run. See Income tax on salary.
8. The approval gate
The seeded payroll-run approval process needs its single step pointed at your approver, or reshaped entirely — steps, entry conditions, maker-checker. Final approval posts the accrual, so treat approver assignment as part of go-live, not an afterthought. See Payroll run approval.
9. Access
Payroll data is as sensitive as data gets in a business system. Scope who can see and act on runs, payslips, compensation and declarations through security profiles — separating the payroll operator (prepare, calculate) from the approver (approve, and thereby post) at minimum.
Go-live checklist
| # | Item | Verified by |
|---|---|---|
| 1 | Control accounts per company, default bank set | A test post and payment resolve without account errors |
| 2 | Components mapped to GLs | Post succeeds; no line-named failures |
| 3 | Structures built, sequenced, clamped | A test calculation matches a hand-worked employee |
| 4 | Employees + compensation complete | Run's skipped count is zero, or explained |
| 5 | Periods created for the year | Pay dates land where finance expects the accrual |
| 6 | Statutory tables current | PT, PF, ESI, LWF amounts match the authority's current figures |
| 7 | Tax tables for the financial year, both regimes | TDS column is non-zero for taxable employees |
| 8 | Approval step assigned | A test run reaches the approver's inbox |
| 9 | Security profiles scoped | A non-payroll user cannot open runs or payslips |