A company’s payroll is one of the most important aspects of a company’s operations. Aside from the fact that the timely and accurate distribution of employees’ salaries can have a tremendous impact on employee morale, an efficiently-managed payroll system can keep a company’s finances balanced, and on-track with internal financial objectives.

Payroll departments in most of the Indian companies generally lack the necessary resources and experienced professionals to manage their duties efficiently. Also for many foreign firms, handling payroll is an onerous task and maintaining payroll management capabilities is costly even in their own origin countries. When one wishes to set up business in India, the task becomes even more challenging due to the legal differences, and the constant need for close attention to changing regulations that inherently comes with managing payroll. Establishing a company payroll in India with the help of professionals from certified firms is an important decision, with high potential gains in return. Many companies setting up a business branch in India do not need payroll services all year long. Those companies can certainly benefit from outsourcing their payroll duties. In this way, only when the appropriate services are needed, companies can hire payroll service experts to perform the tasks they need.

Outsourcing payroll operations to professional services providers can also ensure that foreign businesses are compliant with India’s compensation and taxation laws. Aside from the initial registration of the company and enrollment of employees with the India Labor and Social Insurance systems, and the monthly calculation and payment of workers’ salaries, there are a number of yearly payroll activities that companies need to be aware of. These include the computation of year-end withholding tax adjustments, and the preparation and filing of the Annual Withholding Tax Report for National Tax Purposes, among others.