Getting started with Payroll
Payroll only works correctly if you set it up in the right order. The system needs to know what a salary is made of, how much each employee earns, and when and how you pay before it can produce a single payslip. This article walks you through that order and gives you a checklist.
The big picture
Generating payroll is the last step, not the first. Here is the flow from an empty system to a finished payslip:
- Define salary components — the reusable building blocks of a salary (Basic Pay is built in; you add things like House Rent Allowance, Transport Allowance, Provident Fund, etc.).
- Group components into a salary structure — a Salary Group bundles the components that apply to a set of employees.
- Set each employee's salary — enter the annual amount (CTC) and pick how Basic Pay is calculated for each person.
- Configure Payroll settings — choose your payroll currency, set up payment methods, and (if you deduct tax) configure TDS slabs and your finance year.
- Choose each employee's pay cycle and allow them for payroll — monthly, weekly, bi-weekly or semi-monthly, and switch on "Allow Generate Payroll".
- Generate payroll for the period, review, mark paid and share payslips.
Each of those steps has its own article. This page is the map.
Step 1 — Define salary components
A salary component is one line that can appear on a payslip — an earning or a deduction.
- Open Payroll Settings and stay on the Salary Components tab.
- Click Add New Salary Components.
- Fill in the form:
| Field | What it means |
|---|---|
| Salary Components | The name shown on the payslip (e.g. "House Rent Allowance"). |
| Component Type | Earning (adds to pay) or Deduction (subtracts from pay). |
| Value Type | How the amount is worked out — see the table below. |
| Component Value (Monthly) | The monthly figure or percentage. The Weekly / Bi-weekly / Semi-monthly boxes are filled in automatically when you type a monthly value (you can override them). |
Value Type options:
| Value Type | Meaning |
|---|---|
| Fixed | A flat amount every cycle. |
| Percentage of CTC | A percentage of the monthly CTC (annual salary ÷ 12). |
| Percentage of Basic | A percentage of the employee's Basic Pay. |
| Variable | The amount is entered per employee when you set their salary, not fixed here. |
Tip: Create every earning and deduction your company uses once, here, before building salary groups. Basic Pay is handled separately on each employee's salary — you do not create it as a component.
Step 2 — Build a salary group (structure)
A Salary Group is a named bundle of components. Assigning a group to an employee means all of that group's earnings and deductions appear on their salary.
- On the Salary Groups tab click Add New Salary Group.
- Enter a Name for the group.
- In Assign Components, pick the components (from Step 1) that belong to this group.
- Save. You can later open a group and use Manage Employee to attach employees to it.
Step 3 — Set each employee's salary
This is where you enter how much each person actually earns. See Employee Salary for the full walkthrough. In short: find the employee, click Add Salary, enter the Annual Salary (CTC) and choose how Basic Pay is calculated. The components from their salary group are applied automatically.
Step 4 — Configure Payroll settings
Work through the tabs you need:
| Tab | What to set |
|---|---|
| Salary Components | (Step 1.) |
| Salary Groups | (Step 2.) |
| Salary TDS | Tax slabs (Salary From / Salary To / Salary Percent) plus the TDS Status, the Assign TDS Salary threshold, and your Finance Start Month. Only needed if you deduct tax. |
| Payment Methods | The ways you pay salaries. Bank Transfer, Cash, Cheque and PayPal are created for you; add more if needed. |
| Salary Slip Data | Pick which extra employee custom fields appear on the payslip PDF. |
| Payroll Currency Setting | Choose the currency used across Payroll. |
Step 5 — Set the cycle and allow each employee for payroll
On the Employee Salary list each row has two inline dropdowns:
- Employee Salary Cycle — choose Monthly, Weekly, Bi-weekly or Semi-monthly for that person. New employees default to Monthly.
- Allow Generate Payroll — set to Yes. This is the switch that decides whether the employee is picked up when you generate payroll.
Important: An employee with Allow Generate Payroll = No is skipped completely when you generate payroll, even if they have a salary. This is the most common reason an expected employee is missing from a payroll run.
Step 6 — Generate payroll
Once Steps 1–5 are done you are ready to run a pay period. Go to , pick the year, cycle and month, generate, review and pay. The full step-by-step is in Generating Payroll.
Setup checklist
Use this before your first real payroll run:
- Every earning and deduction exists as a Salary Component.
- At least one Salary Group exists and contains the right components.
- Each paid employee is attached to a salary group (where applicable).
- Each paid employee has a salary entered (annual CTC + basic pay).
- Payroll Currency is set.
- At least one Payment Method exists.
- If you deduct tax: TDS slabs, TDS status, Assign TDS Salary and Finance Start Month are configured.
- Each employee has the correct Salary Cycle.
- Each employee to be paid has Allow Generate Payroll = Yes.
When every box is ticked, move on to Generating Payroll.