Payroll Services That Make Your Business Easy

Payroll Services: The Ins And Outs

Any business with employees must acknowledge their need to do payroll. For some smaller businesses, this feat is achieved with minimal effort and does not require outsourcing to accountants for payroll services. Some business owners, however, simply do not have the time to take on the lengthy process and in turn must reach out. In just a few minutes of reading, find out exactly what it is you need to know about what payroll entails and payroll services.

What is payroll, and what are payroll services?

In a basic sense, payroll refers to the employees under your care that you pay, as well as their information. Essentially it is the amount of money you pay each employee every day. At the same time, it refers to the process of calculating, distributing and documenting taxes and wages of your employees. Sometimes the nuances of the service and what it entails can become overwhelming, so let’s dive deeper into its meaning.

1. Gathering employee information as part of payroll services

Before any payroll can be run, information about employees will need to be collected. This usually entails employees filling out specific forms that question their name, address, ID number, income tax, to name a few points. All of the aforementioned information is needed in order to begin the payroll process.

2. Calculating the hours/days worked

Depending on whether you have hourly or daily employees, you need to track the amount of time they have worked accordingly as part of payroll. Doing so correctly and accurately means that your employees will be paid the proper amount that they are owed.

3. Leave pay information needed for payroll services

Everyone needs some time off, and sometimes those periods do not count as paid leave. The payroll process takes these variables into account when adding up how much each employee is owed.

4. Overtime pay calculated with payroll services

If your employees are working overtime, they need to be paid accordingly. Working overtime means that the employee remains at work or continues their project past the allotted workday time and schedule. In many South African companies, overtime pay is calculated at one and a half times higher than the normal working rate. On Sundays and public holidays, overtime rate usually goes up to 2 times more than normal. However, this is a general trend and by no means applicable to every company.

Part of payroll services is calculating the amount of overtime an employee has completed and the correct remuneration thereof.

5. Fringe benefits considered in payroll services

Fringe benefits are benefits included in a hiring package offered by a company, they consist of aspects such as:

• Health insurance
• Life insurance
• Employee discounts
• Vehicle allowances
• Tuition assistance

1. Other earnings

When employees receive bonuses or commission, these transactions fall under the other earnings or “other pay” category.

7. Deductions considered in payroll services

Unlike the former where a payment from the company to the employee is seen, deductions include money that is taken from the employee as per agreement or appropriate circumstance. Within this category are multiple subsections, namely:

• PAYE (Pay as you earn)

Every employer is responsible for deducting an employee’s PAYE and submitting it to SARS at the end of every month. PAYE (pay as you earn) refers to that employers must deduct monthly from the salary or wages of each employee. The amount of PAYE each employee pays depends on how much they make and the latest government tax regulations at the time of submission. Payroll services or software will ensure the correct monthly employer declarations are submitted, payment of the tax is made to SARS, and that tax certificates are generated for the applicable tax year.

• Garnishments

This refers to a court-ordered deduction on an employee’s salary. This order may be the result of an unpaid account or an order for child support, to name two examples. The employer must then ensure this fee is deducted and paid over to the relevant parties. If you have a payroll services accountant, this somewhat awkward and time consuming process will be handled without requiring any effort on your behalf.

• UIF

The unemployment insurance fund, like PAYE, is deducted off the employee’s salary and paid over to SARS.

Options for payroll

There are several options to consider when making your decision about payroll services. The three most viable being:

• Doing payroll by hand

In this instance, you as an individual, or members of your team will need to learn how to do payroll. This option, while in theory saves you funds as you will not outsource the service, is the most time consuming. You may have to forgo other tasks of your every-day business operations so that you have time to complete this important task.

• Using an accountant for payroll services

Outsourcing payroll services is a viable option that requires the least amount of effort on your behalf. Although the service may be quite expensive, the accountant will shoulder the entire process and accuracy and timeliness is assured.

• Using payroll software

Payroll software is designed with the user in mind and is more often than not relatively inexpensive. This software automates the payroll process but does require a considerable amount of time and effort on your part all the same. Payroll software at its most basic function calculates wages and taxes, and some programs even turn in taxes.

Learn how to do payroll instead of outsourcing payroll services

If enlisting the payroll services of an accountant are not financially possible, and you have a considerable amount of free time to spare, you could consider learning how to do payroll yourself. The idea of payroll or payroll services was probably the last one from your mind when you decided to start a business, yet despite this it should never take the backseat if you wish for smooth operating and satisfied employees.

The following is a brief guide that may help you on your way to becoming keyed-up on payroll:

• Schedule a meeting with your accountant

Even if you decide to walk the payroll route alone, you should consult with your accountant beforehand. As industry buffs, they will be able to advise you on best practices based on their own knowledge of your business – making this personalised advice profoundly invaluable. Think about writing a list of some questions you wish to ask so you do not get too side-tracked in all the excitement during your consultation. Also keep in mind that you may still enlist your accountant’s assistance with certain legs of the journey such as tax filing.

• Be on the lookout for resources

It often seems like government tax rules and regulations never stop changing – and this is relatively true. When you take the journey of grappling with your own company’s payroll you are assuming an important duty and as they say, with great power comes great responsibility. It is up to you to keep up to date with any changes, and you can do so by actively checking blogs, SARS web pages and the news in order to ensure you are operating in a lawful manner at all times. Some payroll software providers offer excellent “how to” guides and tutorials if you are utilising their tech.

• On the topic of tech

If you are undertaking your own payroll duties, it is likely you will be working with a payroll software – one that is either automated or manual. Both options call for different responsibilities and there is no right or wrong way to utilise payroll software. It is up to you to do the correct research into all viable options so that decision you end up making is an informed one.

• Take a class

We spend years of our lives in school and then university in many cases. Why not add another serving of studies while you are at it and take a class on how to do payroll? The online world is bursting full with learning opportunities, whether you decide to take a free class on YouTube or invest in a short course. Taking a class may give you that extra boost of confidence you need when tackling this complicated process.

Key advantageous of outsourcing payroll services

The few brief definitions above may have opened your eyes somewhat to the world of payroll, but in truth it is more akin to a bottomless well of knowledge hard to grasp unless you have had years of industry experience. Being able to count on someone who knows payroll like the back of their hand is a major benefit to your business, similar to the several key advantageous of employing payroll services listed below:

• You can avoid SARS penalties by enlisting an accountant for payroll services

One of the most pressing factors behind ensuring that your payroll is completed timeously is the avoidance of SARS penalties. Many businesses face considerable penalties as a result of late or incorrect payroll filings and payments. Getting off on the wrong foot with SARS is inadvisable to say the least, especially as a small or medium sized business. If you are a small business owner, tasked with a heap of responsibilities, keeping up with the ever-changing government tax regulations may seem like an impossible feat.
When you enlist the service of an accountant for payroll services, you can rest easy knowing that not only will SARS responsibilities remain clean and efficient, but your employees will benefit from on-time payments and accurate earnings. This is highly important in the journey to maintain employee morale.

• Keep your information safe and secure with payroll services

The payroll process can in truth be quite a risky one. If you have a team of employees who you have tasked to do your company’s payroll, you are always running the risk of error – no matter how much you may trust your team. This is particularly more prevalent if you are in charge of a large work force and certain deductions or additions may pass by unseen. When you outsource the payroll process to your trusted accountant, you can rest easy knowing that your own hard-earned money, and that of your employees, is in good hands and will be allotted to all relevant parties with accuracy and timeliness.

• Saving time with payroll services

Even if you have invested in automated payroll software and tech, there are still those pesky and repetitive data input sessions required of you or your employees in order to ensure the smooth running of the software. When it is crunch time, and several other projects are on the go, making these “small” data inputs into the program are more time consuming than you may have originally imagined – and you or your employees are losing vital working time in the process.

Employing and outsourcing an accountant for payroll services instead of utilising software also has another key advantage. All software is both renowned, and resented, for its constant need to update in order to fix bugs or improve user experience, and more often than not, fees will undoubtedly rise as the software evolves. You are unlikely to face a similar experience with your reliable accountant.