Five tips to perfect your payroll system
Payroll doesn't have to be overwhelming: here’s what you need to know to keep your business healthy and on the right side of the law, says Sage
Running a successful business isn’t just about making sales and increasing profits, it’s also about complying with all the relevant legislation.
Accurate financial record-keeping and making deductions according to your legal obligations is imperative.
This can be a seemingly overwhelming process, especially if you’re running a start-up or a limited company, but it doesn’t need to be. All these processes are in place to keep your business healthy plus you’ll be on the right side of the law and your employees will always feel secure because they’ll be informed.
Clarity is also vital for running a successful business, and your payroll system needs to be as clear as possible.
Here are five tips to make that happen:
1. Keep a record of payments to employees
It’s important to record all salaries and payments and ensure that every employee receives a payslip.
You are responsible for registering for pay as you earn (PAYE) and UIF with the SA Revenue Service (Sars). Your employees are responsible for registering for income tax with Sars, and providing you with their income tax reference number.
Clarity is vital for running a successful business, and your payroll system needs to be as clear as possible
Payslips must detail specific information, including gross and net amounts. This means all salary deductions must be calculated correctly, including amounts for UIF, PAYE, contributions, retirement funds and medical aid.
Once this is done, you must report all payments and deductions to Sars when submitting your various tax returns.
2. Make sure your employee records are up to date
Employee records change all the time, and it’s your responsibility to keep them up to date. Implement a system in your company that allows you to regularly review any changes of address and bank account details. If you don’t, you run various risks.
3. Know the law
SA has some of the most stringent tax and labour law policies in the world. It’s important to have a general understanding of the relevant laws. If you’re not sure, go on the Sars website for the information you need, or hire an accountant who can help you.
4. Comply with Sars
Sars requires different kinds of information from you throughout the tax year, depending on the size of your business.
Your duty to the revenue service is to make sure all submitted information is correct. If there are errors, you may be asked to pay more than you owe, or you could incur a fine.
5. Have technology on your side
Implement the right payroll software. Integrated software that can handle multiple operations will go a long way to ensuring you’re compliant.
Your software should be able to on-board new clients easily, create pay cycles and process payroll, generate payslips, and calculate all Sars requirements.
This article was paid for by Sage.