Short answer. Run payroll in a fixed sequence each month: collect changes, compute gross to net pay, apply statutory deductions and employer contributions, review and approve, pay employees and the agencies by their deadlines, file and archive, then reconcile to the ledger. A written checklist makes the cycle repeatable and reduces errors.
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In this article
- 1. Collect changes
- 2. Compute gross to net
- 3. Statutory deductions and employer contributions
- 4. Review and approve
- 5. Pay employees and agencies by deadline
- 6. File and archive
- 7. Month-end reconciliation to the ledger
- Make it repeatable
- Control points that prevent penalties
- An exception log
- Frequently asked questions
1. Collect changes
Before the cut-off date, gather:
- New joiners and leavers, with start and end dates.
- Salary changes, promotions and allowances.
- Overtime, commissions, bonuses and claims.
- Unpaid leave and other deductions.
- Updated employee details, such as bank accounts and tax status.
2. Compute gross to net
- Calculate gross pay for each employee from the approved inputs.
- Apply statutory and agreed deductions.
- Arrive at net pay.
3. Statutory deductions and employer contributions
Need this done for you? Axecta’s payroll processing and employer compliance team can handle this for your company. See the payroll processing and employer compliance service.
- EPF, SOCSO and EIS using the agencies’ current tables.
- PCB using LHDN’s current method. See PCB/MTD explained.
- Any other statutory items that apply to your business.
See EPF, SOCSO and EIS explained.
4. Review and approve
A second person should check:
- Totals against last month and explain differences.
- New joiners and leavers.
- Unusual amounts.
- Bank details changes.
Obtain written approval from an authorised person.
5. Pay employees and agencies by deadline
- Pay salaries by the date in the contract or policy.
- Pay EPF, SOCSO, EIS and PCB by each agency’s due date and keep the proof.
Put each deadline in a calendar. See the 2027 compliance calendar.
6. File and archive
- Issue payslips.
- Save the payroll report, contribution submissions and payment proofs.
- Store them securely for the required retention period.
7. Month-end reconciliation to the ledger
Match payroll totals to the general ledger: salaries, employer contributions, liabilities for unpaid items. Send the summary and payment proofs to your accountant as part of the monthly document pack.
Make it repeatable
Name an owner for each step, set an internal cut-off earlier than the agencies’ deadlines, and keep a list of what changed each month. Axecta’s payroll team can run this cycle for you, from receiving changes to filing and reconciliation.
Control points that prevent penalties
| Control | When | Owner |
|---|---|---|
| Inputs locked by cut-off | 3 working days before pay date | Payroll |
| Second-person review | After computation | Finance lead |
| Statutory payments scheduled | At approval | Payroll |
| Proof of payment filed | Same day | Payroll |
| Ledger reconciliation | Month-end | Accountant |
Use the tables on KWSP and PERKESO, and LHDN’s PCB method, and check the table date on every run. See EPF, SOCSO and EIS explained.
An exception log
Record anything unusual: late changes, corrections, back-pay. A short log makes the next month easier and helps if an agency queries a payment.
Frequently asked questions
What are the steps in payroll?
Collect changes, compute pay, apply deductions, review, pay, file and reconcile.
What is the payroll cut-off?
The date by which all changes must be submitted for the month. Set it before the pay date.
What must be paid each month?
Net salaries, plus EPF, SOCSO, EIS and PCB by their due dates.
How do I reconcile payroll?
Match payroll reports and payments to the ledger and agency records. Axecta does this monthly.
What is a good internal cut-off?
A few working days before the pay date, agreed with the team.
Who should review payroll?
Someone other than the person who prepared it.
Where do I log exceptions?
In a simple sheet kept with each month’s payroll file.
Want this checklist run for you every month?
Axecta Management Services is a full-suite accounting, company secretarial and consulting firm in Kuala Lumpur, serving companies from SMEs to MNCs.
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Keep reading
- EPF, SOCSO and EIS Contributions Explained
- What Is PCB/MTD and How Is It Calculated?
- What Documents Should You Send Your Accountant Every Month?
- Malaysian Company Compliance Calendar for 2027
- Employer Payroll Obligations in Malaysia
- Outsourced Payroll Services: What Do They Include?
- Employee Costs & Hiring Employees: the full guide