How to Manage Payroll In a Company Complete Guide For New Indian Businesses

Setting up payroll for the first time can feel confusing, especially when you’re running a growing business and have a hundred other things to handle. You suddenly have to figure out PF registration, ESI eligibility, TDS, salary structures, and compliance all at the same time.

The good news is that payroll doesn’t have to be complicated. And that’s why we  built waggex to make payroll simpler and accessible for every indian company. This guide walks you through the basics, from setting up and managing payroll manually in the early days to knowing when it’s time to move to payroll software. 

We’ll also cover what you should look for when choosing the right payroll software for your business, and honestly help you find the solution that works best for your company without being biased.

Step 1: Understand the Basics of Payroll Setup

Before calculating a single salary, four things need to be in place. Get these wrong and every payroll run after one mistake will be wrong too.

• Salary structure. Every employee needs a defined salary breakup basic, HRA, LTA, special allowance. Since November 2025, basic salary must be at least 50% of gross under the Labour Code. This affects PF calculation, so fix the structure before you start. 

– Full guide: How to Create a Salary Structure in India.

• PF and ESI registration. PF is mandatory when you cross 20 employees. ESI when you cross 10 in most states. Register before processing salary for the month you cross the threshold not after.
• Tax regime for each employee. The new regime is the default from FY2026-27. Employees who want the old regime must submit Form 12BB. If nothing is submitted, run TDS on the new regime.
• Attendance and leave records. Finalise who worked how many days before payroll runs. An attendance record that changes after salary is processed creates disputes that are difficult to fix later on.

Method 1: How to Manage Payroll Manually Using Excel

This method will Works for: Teams under 15 people with simple, consistent salaries.

The manual approach is straightforward when your team is small and salaries don’t change much month to month. Here’s the actual process:

• Build a salary register. One sheet with every employee name, basic, HRA, LTA, special allowance, PF enrollment, ESI applicability, work state for Professional Tax.
• Track attendance separately. Paper register or a simple spreadsheet who came in, which days, any approved leaves or LOP.
• Calculate each month. Gross minus LOP deduction, minus employee PF (12% of basic), minus ESI if applicable (0.75% of gross if gross ≤ ₹21,000), minus TDS, minus Professional Tax. Net pay is what transfers.
• Generate payslips. Either manually in Word or using an Excel template. Our free payroll Excel template has all the formulas pre-built.
• File and deposit statutory dues. PF by 15th, ESI by 15th, TDS by 7th (March TDS by 30th April). These non-negotiable late deposits attract interest and penalties.

For the complete calculation walkthrough with real numbers: How to Calculate Payroll in India.

Method 2: Manage Payroll Using Payroll Software

Works for: 10+ employees, or anyone who wants accuracy without spending hours on it.

The main benefit of payroll software isn’t the calculation, it’s that attendance connects directly to payroll. No export, no manual data transfer, no reconciliation before salary day. The software knows who was present, how many leaves were taken, what was approved and what was LOP. Payroll runs from that data.

Here’s a quick comparison of doing it manually versus using software:

Time saved using software vs manual, for a 20-person team: approximately 8–10 hours per month. That’s one full working day, every month, back to the person managing HR.

Payroll Tools Worth Knowing About

Several payroll tools work well for Indian businesses. The right one depends on your team size, whether you have field or remote staff, and how much you need beyond basic payroll.

• greytHR Best compliance depth in the market. Free plan for up to 25 employees. Good for office-based teams where statutory accuracy is the priority.
• Keka Strong on performance management and employee self-service. Better suited for companies above 50 employees where HR is a full function.
• Waggex Built for startups and companies managing payroll for the first time. GPS + face attendance connected directly to payroll. Every feature included on every plan. Covered in detail below.
• Pocket HRMS AI chatbot handles routine employee queries, reducing HR inbox load. Makes sense for teams of 80+ with a small HR team.
• SalaryBox Both hardware attendance device and mobile app, connected to the same payroll. Useful if you need a gate device for some staff and mobile check-in for others.

Waggex: Payroll Software for Companies Getting Started

Most payroll softwares are designed for HR teams who already know what they’re doing. Waggex is built for the founder or operations manager running HR themselves, someone who needs a system that just works without a two-month implementation process.

Here’s what you get on every plan no feature gating, no modules to buy separately:

The part that makes the biggest difference in practice: attendance feeds directly into payroll. Employees check in through the staff app GPS-verified, face-verified on the server. Their attendance is already in the system when payroll runs. LOP calculates automatically. OT flags when someone works past their shift end. No one has to reconcile anything before salary day.

For field staff and remote teams, live location tracking and geo-fencing mean attendance isn’t just a check-in time, it’s a verified location. Useful for delivery teams, field sales, and service technicians.

Pricing Every Feature on Every Plan

The free plan is not a trial. It’s a permanent free tier with every feature GPS attendance, payroll, leave management, shift management, compliance for up to 10 employees. No credit card. No setup fee. You add your employees, configure their salary structure once, and payroll runs from there. Start here.

Payroll Compliance Deadlines: Important Dates to Know

Payroll compliance in India runs on fixed deadlines. Missing them isn’t just inconvenient, it attracts interest and penalties from day one of the delay.

• 7th of every month: TDS deposit (30th April for March TDS only)
• 15th of every month: PF deposit via EPFO portal (ECR file) and ESI deposit via ESIC portal
• 31 Jul / 31 Oct / 31 Jan / 31 May: Quarterly TDS return Form 138
• 15 June annually: Form 130 (updated Form 16) issued to every employee
• State-specific: Professional Tax monthly or half-yearly depending on the state. See state-wise rates here.

The Waggex Reminder Management feature sends alerts before each of these deadlines so nothing slips through. Full compliance calendar: Payroll Compliance in India.

Payroll doesn’t have to take up your whole day every month. With 5 employees, doing it manually is manageable. At 15, it starts taking more time. By 25, it can become a real headache.

Start with what works for you today. When payroll starts taking too much time, switch to software. It doesn’t have to be a big project.

The free Waggex plan is a simple place to start full features, no cost, no commitment.