Payroll is the compensation a business pays to its employees for their work in a set period or on a given date. For larger corporations, it’s usually managed by the accounting or human resources department of a company. Small-business payrolls can be handled directly by the business owner or an associate. Discover more with The Acumen Group as we elaborate on the benefits of using payroll for businesses.
What you need to know about payroll
One of the biggest reasons many small businesses outsource their payroll to a third-party provider is that it’s more complicated than it seems. There’s a list of requirements and submissions that a company needs to comply with to avoid penalties from both SARS and the Department of Labour.
According to South African law, all registered companies should comply with annual, bi-annual and monthly PAYE (pay-as-you-earn tax), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levy) requirements. Every South African employer should be registered as an employer at both SARS (for PAYE, UIF, and SDL) and the Department of Labour (for UIF). Often neglected are the monthly returns, which need to be submitted to both SARS and the Department of Labour. As per South African law, a contribution of 1% of your employees’ salary is given as a UIF. Also deducted is 1% of your employee’s salary as their contribution to UIF. However, what employers often don’t know is that there’s a cap of R 177.12. This is just a brief overview of what employees and employers need to know about payroll services, make sure to get educated about the process as there is so much more to learn.
Benefits of payroll services
There are several benefits of using payroll services, here we’ll touch on four of them.
1- The payroll process is time-consuming but necessary. Outsourcing payroll services means employees spend more time focused on the business. Improving productivity and saving time as well.
2- Fast response. Payroll providers dedicate their time to resolving queries or issues employees may have, speeding up response times.
3- By hiring professionals whose only responsibility is payroll, you’ll minimise the possibility of errors, missed deadlines, or late payroll submissions.
4- Understanding the process can be confusing. By outsourcing the service, the results are reliable, and it ensures employers are compliant.
Common problems faced during this process
As previously mentioned, payroll is a complicated process. While it does make things easier, it also comes with its challenges. Payroll mistakes made during processing don’t only impact the employee’s pay, but also any deductions and benefits that they might have. This can affect taxes, accruals, pensions, garnishments, and more. Gathering all the necessary inputs like attendance, leaves, reimbursements, and over time, can be tiresome. With this data scattered across systems and teams, payroll often suffers the loss of data and inaccuracies in processing.
Processing payroll is a complex and time-consuming endeavour that requires adherence to strict laws and regulations. Payroll service providers generally provide their services from afar, giving employers the freedom to focus on the business. Let’s work together. Contact us to set up a full payroll function and administration as well as structure remuneration packages for your business.
