TutorialKart.comHow to Define an Employee Category in Tally
An employee category in Tally is used to classify employees according to factors such as project, location, department, branch, or cost allocation requirement. Categories are especially useful when payroll information must be analysed across different operational units.
For example, a company may create employee categories named Head Office, Factory, and Project Site. Employees can then be assigned to the appropriate category while creating their employee masters.
Before Creating Employee Categories in Tally
- Open the company in which payroll is maintained.
- Ensure that payroll features are enabled for the company.
- Decide whether the category will be used for revenue allocations, non-revenue allocations, or both.
- Use clear category names that represent the actual project, location, branch, or reporting unit.
Create a Single Employee Category in Tally
Path: Gateway of Tally => Payroll Info => Employee Categories > Single Category > Create
Step 1: From the Gateway of Tally screen, select Payroll Info.
Step 2: Under Payroll Info, select Employee Categories.
Step 3: In the Employee Categories menu, locate Single Category and select Create.
Step 4: In the Employee Category Creation screen, enter the required category details.
- Name: Enter a meaningful name for the employee category, such as Head Office, Sales Division, Project A, or Chennai Branch.
- Allocate revenue items: Select Yes when revenue-related values must be allocated to employees belonging to this category.
- Allocate non-revenue items: Select Yes when non-revenue values, such as capital or balance-sheet-related allocations, must be assigned to employees in this category.
Review the entered details and choose A: Accept to save the employee category in Tally.
Meaning of Revenue and Non-Revenue Allocation Options
The allocation settings determine the types of accounting values that can be associated with employees in the category. Select the options according to the organisation’s payroll and cost-allocation requirements.
| Employee category option | When to select Yes |
|---|---|
| Allocate revenue items | Use this when employee-related income or expense values must be allocated for reporting or cost analysis. |
| Allocate non-revenue items | Use this when employee-related values connected with assets, liabilities, or other non-revenue accounts must be allocated. |
If employee categories are required only for basic grouping and no accounting allocation is needed, retain the settings that match the company’s accounting configuration.
Create Multiple Employee Categories in Tally
Use the multiple-category creation option when several employee categories must be entered at the same time. This is faster than opening the single-category creation screen separately for every category.
Path: Gateway of Tally => Payroll Info => Employee Categories > Multiple Categories > Create
Step 1: Under Multiple Categories, select Create.
Step 2: In the Multi Employee Category Creation screen, enter each category name and configure the required revenue and non-revenue allocation settings.
After entering all category details, choose A: Accept to save the employee categories.
Single Category and Multiple Categories in Tally
| Creation method | Suitable use |
|---|---|
| Single Category | Create or configure one employee category with full attention to its settings. |
| Multiple Categories | Create several employee categories together using a list-style entry screen. |
Assign an Employee Category to an Employee
Creating a category does not automatically place employees in it. While creating or altering an employee master, select the appropriate employee category in the relevant category field. Use the same classification policy consistently so that payroll reports remain accurate.
For example, an employee working at a factory location should be assigned to the Factory category rather than the Head Office category. If the employee later moves to another project or location, review the employee master and update the classification as required.
Common Employee Category Setup Errors in Tally
- Using unclear names: Avoid names such as Category 1 or Group A when a branch, project, or department name would be more informative.
- Creating duplicate categories: Check existing categories before creating a new one with a similar spelling.
- Selecting incorrect allocation settings: Confirm whether revenue or non-revenue allocation is actually required before enabling the options.
- Not assigning employees: After creating categories, update the applicable employee masters.
- Mixing classification methods: Do not use location-based names for some categories and department-based names for others unless that structure is intentional.
Employee Category Setup Checklist for Tally
- Payroll features are enabled for the selected company.
- The category name clearly identifies a project, branch, location, or reporting unit.
- Revenue allocation is enabled only when required.
- Non-revenue allocation is enabled only when required.
- The category has been accepted and saved.
- Relevant employee masters have been assigned to the correct category.
- Duplicate or inconsistently named categories have been avoided.
Frequently Asked Questions About Employee Categories in Tally
What is an employee category in Tally?
An employee category is a payroll classification used to organise employees by project, branch, location, department, or another reporting requirement.
What is the difference between an employee category and an employee group?
An employee category generally provides a broad classification such as a project or location. An employee group is commonly used to organise employees within the payroll structure, such as managers, technicians, or administrative staff. The exact structure should follow the company’s reporting requirements.
Can several employee categories be created together?
Yes. Open Employee Categories, select Multiple Categories, and choose Create to enter several categories from one screen.
Should both revenue and non-revenue allocation be enabled?
Enable each option only when the corresponding type of accounting value must be allocated to employees in that category. The correct choice depends on the company’s payroll and accounting configuration.
Why is the Employee Categories option not visible in Tally?
The option may not appear when payroll features are not enabled for the company or when the current configuration does not provide access to payroll masters. Review the company’s payroll feature settings and user permissions.