DESIGN AND IMPLEMENTATION OF A COMPUTER BASED PAYROLL SYSTEM

1.1 Introduction

A payroll system is software which organizes and arranges all the tasks of employee payment and the filing of employee taxes. These tasks may include keeping tracking of hours, calculating wages, withholding taxes and deductions, Net pay, Payroll software plays several roles for the user, the employees and the company. Payroll system is the heart of any Human Resource System of an organization. The solution has to take care of the calculation of salary as per rules of the company, income tax calculation and various deductions to be done from the salary including statutory deductions like Income tax and provident fund deductions. It has to generate pay-slip, cheque summary and MIS report.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitation of the study and Definition of technical terms.

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1.2 Background of Study

A payroll is a company’s list or records of its employees, which is often used to refer to the total amount of money that a company pays to its employees. Payroll makes deductions from employee’s wages for taxes, wage garnishment, health and life insurance, spending accounts and retirement investments. Payroll works with your accounting department to ensure that wage deductions and other payroll expenses are paid and properly reported.

The term Payroll refers to a series of accounting transactions involved in the process of paying employees for the services rendered after taking all the statutory and non-statutory deductions into account, in conformance with the terms of employment, company policy and the law of the land i.e., payment of payroll taxes, insurance premiums, employee benefits and other deductions. An efficient payroll system facilitates an error-free, accurate and timely employee payment while ensuring that the employment is well within the valid work permit.

In an organization, there are several departments and each department has a payroll section to manage its payroll activities. Each section has to perform necessary personnel operations like data collection and preparation, entry, updates, monitoring and reporting of data. Many of these existing practices and procedures need to be reassessed at this time of changing needs, changing demands of employees and changing technologies So an organization needs an integrated web based payroll system that would integrate personnel and pay- roll related data collection, processing in individual departments and payroll audit in a more efficient and streamlined way. With this computer based payroll system, payroll section would be able to keep a record of employees including their personnel data, pay band, allowances, deductions, savings and taxes etc.. Net pay of each employee is calculated by using the information about his allowances and deductions. All these complex calculations have been incorporated herein. Many optional allowances and deductions for the employees are added by specifying the corresponding details.

The individual pay slips and deduction vouchers are printed out as a receipt. Pay bands, grade pay, allowances, deductions and tax information are updated if there is an amendment in salary structure. A payroll is a list of the employees and the payments due to each employee for a specific pay period. A pay period is the amount of time over which an employee is paid. Most businesses use weekly, biweekly (every two weeks), semimonthly (twice a month), or monthly pay periods.

The payroll is a major expense for most companies. To ensure accurate records, most business set up a payroll system for recording and reporting employee earning information. Payroll is an application that lends itself well to the computer because of its repetitive procedures and calculation. A Web based payroll system can perform the same basic function as those performed manually by payroll clerk. The important differences are the computer’s speed, accuracy, reliability, and ability to easily generate reports. In a web based payroll system, the computer stores data such as an employee’s name, address, social security number, marital status, number of withholding allowances, pay rate and voluntary deductions. At the end of each pay period, the operator enters all payroll transaction data, such as regular and overtime hours for each employee and deduction into the computer. The computer calculates all withholding taxes and other deductions and accumulates and updates the earnings and withholdings.

It is understood that organizations are tired of managing thousand of odd papers, pay slips, payroll reports, and salary details and so on. Imagine that organizations have a payroll processing system which will generate our pay slips and payroll reports within seconds. An organization can help others Computer Based Payroll System by developing a customized payroll application that suits their specific requirements.

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1.3 Statement of Problem

Investigation revealed the problems of the existing system which are stated as follows:

1. Calculating salaries through manual operation is burdensome and stressful.
2. Difficulty in handling personnel records and inaccessibility of information when needed
3. Overpayment/Underpayment of salaries and less security in the manual system.
4. Delay in payment of staff salaries because too much time is spent in preparation of the payroll.
5. The use of paper to keep pay details about each employee which results in too much paper work.

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1.4 Aim and Objectives of the Study

The aim of the study is to design and implement a Computer Based Payroll System that will eliminate the problems of the existing system. In achieving this aim, the following specific objectives were laid out as follows to develop an application software that will:

1. Calculate the basic salary and allowance of staff.
2. Provide an easy way not only to automate all functionalities involved,
3. Manage the leaves and Payroll for the employees of the Federal Polytechnic Nekede.
4. Provide full functional reports to the management of the school with the details about usage of leave facilities.
5. Accurately stores employee data and retrieves payment history when needed.

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1.5 Significance of Study

The major importance of the study is to improve the efficiency of payroll management and to quickly find out information of an employee details to provide easy and faster access information, also to provide user friendly environment for staff workers during payroll activity. Department can use it sitting at different locations simultaneously.

The study will aid in reducing errors, fraud, increase speed and also aid growth in organizations if successfully implemented. Manual payroll systems in organizations will be totally eliminated with this Web based system in place.

This study will also be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

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1.6 Scope of Study

The study focuses on the Design and Implementation of a Computer Based Payroll System using Federal Polytechnic Nekede as a case study. This application works in multiple PC’s installed on multiple computers but sharing same database by which users of different department can use it sitting at different locations simultaneously.

But in future we can make the application where the database will be hosted in order to manage all the departments which will be located in different places and by keeping domain of application online.

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1.7 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. Research material: availability of research material is a major setback to the scope of the study.
4. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
5. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).

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1.8 Definition of Terms

EPM: Employee Payroll Management

Payroll: List of employee and all their wages and salaries including their allowance and deductions.

Salary: This is usually a monthly payment for regular employment on a yearly basis.

Shift Allowance: This is the allowance granted to an employee who works on shift basis.

Arrears: This represents the accumulation of staff entitlement.

Rent Subsidy: These represent the rent given to an employee for his or her house.

Flowchart: It is a pictorial representation of information in data processing by means of symbols and interconnecting linking the generations.