Payroll Services refers to the administration of employees’ financial records including salaries, wages, bonuses, deductions, and net pay.
Payroll might seem like a simple, straightforward process. You just need to calculate your employees’ hours and send out their pay slips, right?
In reality, there’s a lot more to it. From payroll taxes and wage policies to remitting to the SARS, the process is not as simple as it seems. Things can quickly get complicated. To ensure accuracy, the payroll process can’t be rushed.
What Is Payroll Services?
Payroll is the total amount of wages paid by a company to its employees and other workers (freelancers and contractors).
Payroll processing is an important function for any business—no matter how small. It’s likely your company’s largest expense, and the most time-consuming HR work performed each month. Payroll can be processed weekly, fortnightly or monthly, while the most common pay length period is every two weeks.
“Payroll Services is an important function for any business—no matter how small.”
While the process varies from company to company, payroll is indisputably complicated. It requires an organized system, knowledge of current regulations and taxes, and careful planning.
New businesses unfamiliar with the process will likely find it challenging because of everything that’s involved.
So what exactly are the steps involved?
Before Processing Payroll
Set up New Employees
Before processing payroll, you and your employees have to fill out some paperwork. The documents you’ll need to obtain include those related to medical aid, retirement plans, and income tax withholdings. Your payroll department should set aside copies of each of these forms to have on record.
Collect and Verify Timecard Information
Salaried employees like managers and office staff won’t require a change in wages each pay period. But for hourly employees, employers must collect and analyse information about hours worked.
Your employees might scan their badges in a digital time clock or manually sign in. No matter how you collect this data, managers must verify that employees have entered the accurate amount of time they worked for your payroll staff. Otherwise, you’ll be overspending on payroll.
When processing payroll, you need to know how much each employee costs your business—beyond their salary.
The first step in processing payroll is to prepare a salary slip for each employee.
To do so, here are four important factors you need to consider:
1. Gross Wages
This is the total amount your company pays each employee before any deductions, based on whether the employee is salaried or hourly. Deductions from employee pay can include medical aid, retirement plan contributions, benefits, and tax withholdings.
The amount of money your employees actually receive in their salary slip is called net pay.
While businesses generally cover the cost of benefits, a portion of the total amount may come from your employees’ gross wages.
3. Tax Withholdings
Your company must withhold each employee’s income taxes (PAYE and UIF) from payroll. You need to calculate income taxes and forward payments to SARS on a monthly basis.
Issuing Salary Slips:
Once all the payroll reports have been analysed and are free of errors, it’s time to process payments to employees.
Manually sending out salary slips adds unnecessary work and is prone to error. Thus, most companies today take advantage of EFT payments—benefiting both the business and its employees.
Why Is Payroll Processing Important?
Processing payroll accurately and consistently is necessary for a number of reasons. First and foremost, you’re legally obligated to pay your employees. Failing to pay them on time will damage your company’s reputation, and you’ll face the legal repercussions.
Paying employees consistently and on time demonstrates your company’s financial stability. It also impacts employee morale, safeguarding their trust in your business.
Accurate payroll processing is also crucial to remain compliant with SARS and laws. Legislative changes can be complex. You need to mitigate risks like lawsuits, fines, and penalties by maintaining compliance.
Is your business dealing with payroll processing problems? If so, it’s time to do some investigation.
If you’re issuing salary slips riddled with errors, for example, your employees will find them! Be proactive—dig deeper into all transaction errors and plan how you will mitigate future mistakes.
If you’re struggling to get payroll done on time every pay period and your staff isn’t qualified for the job, it’s time to alter your procedures.
To keep track of all employee information and organize your payroll tasks, you need to create and maintain a payroll register. This is a spread sheet that lists total gross pay, total deductions, and total net pay for each payroll. You’ll also need to back up all your payroll data.
Most online accounting systems have a payroll register along with other functions like an employee earnings record. Having this information is crucial to complete year-end payroll totals and reports, and to complete payroll tax tasks.
Setting up a yearly tax calendar is also a good idea. Doing so will ensure you keep track of all the payroll tax dates throughout the year.
How to Simplify Your Organization’s Current Payroll Process
You know you need to get payroll done accurately and on time every pay period—without fail. It’s not something you can neglect.
But this can be particularly challenging for small companies experiencing rapid growth. Especially if you manage payroll in house, the process can quickly become overwhelming.
Properly managing payroll takes time, patience, organization, and on-going communication. No matter how effectively you’re running your business, issues can always arise.
The good news is there are ways you can simplify the process.
Here are ways to streamline your company’s current payroll process.
Set a Clear Payroll Policy
Review your current payroll policy to ensure it’s clear and concise. Your policy should outline how employees are paid, as well as commission, expense reimbursements, sick days, and more.
Make sure your policy is properly explained so your employees can easily understand it. You should also make it easily accessible by adding it to an online payroll portal.
Create a Budget
Creating a payroll budget helps you plan for future growth and avoid unwanted surprises. Your employees’ salaries will, of course, take up a large portion of your budget. But you should also plan ahead for expenses like taxes and benefits, and make sure you consistently stick to your budget.
By carefully analysing your budget, you may be able to find areas that are over- or under-staffed, and adjust as needed. Doing so will help you avoid unnecessary labour costs.
Classify Your Workers
Correctly classifying your employees (as full-time, part-time, or temporary employees, or contractors) is crucial. Failing to do so could seriously harm your business. To avoid serious legal and financial consequences due to misclassification, ensure you’re properly classifying your workers from the get-go.
Establish a Consistent Payment Schedule
Whether your employees are hourly or montlhy, pay everyone the same way and on the same day. Using the same pay structure and process makes things easier to manage. Once you decide how often to pay your employees and stick to that timeline, the process will run much more smoothly.
Paying salaried employees is, of course, easier since you don’t have to calculate the amount they’re owed each pay period. But even if you have hourly employees, the payment process doesn’t have to be stressful. Having an efficient and consistent system in place will keep things in order.
Provide Payroll Information Online
Your employees will likely want to access their pay information from previous periods and they may have questions about your payroll policy. Answering all their questions, however, can take up a lot of time.
To simplify the process and save time, make payroll information available online and encourage employees to check these resources.
Use EFT payments
Setting up EFT payments is a no-brainer to boost payroll efficiency. The majority of banks and account programs today support eft payments. It’s faster and more convenient than cutting checks for all your employees. It also saves time and labour costs—there’s no need to spend money on printed checks, envelopes, printer ink, or stamps.
Plus, your employees will appreciate knowing when exactly to expect their pay in their accounts.
You can go completely paper-free and allow your employees to access their pay information through an online portal. Your employees will never have to search for payroll information and will be able to access it at any time.
Consolidate All Payroll Information
Keep all your payroll records and documents in one centralized location. SARS requires employers to hold on to records for a specific amount of time. Knowing where all your data is will give you peace of mind.
When you consolidate all your information and can easily access it, you’ll never be left scrambling at the last minute.
Automate Time Tracking
Manually entering time is an out-dated practice. Verifying your employees’ entered hours takes up both your managers’ and your payroll staff’s time. What’s the solution? Automate time tracking.
Even if you own a small business, using automated time tracking software can save you ample time and reduce errors.
Set up Reminders
You simply can’t be forgetful when processing payroll. There are several key dates you need to remember, and keeping track of them all can be overwhelming. For example, you need to send payroll tax reports to the appropriate jurisdictions, send quarterly and annual income tax withholding reports, and more. Forget to submit these reports and you’ll face costly penalties.
Setting up reminders in a payroll system or in your own calendar will ensure you remember these important dates. It can take the pressure off your memory.
Why Your Business Needs Payroll Software
Processing payroll on your own takes time away from the important tasks that go into managing your business.
How can you make the process more manageable?
Using payroll software to streamline payroll allows you to get back to the work that matters—running your business.
Here’s why using payroll software is a smart business decision—no matter the size of your company.
Companies spend way too much time every month processing payroll and taxes. In fact, small businesses spend between one and ten hours processing payroll a month. Not surprisingly, many business owners say bookkeeping and taxes are the worst part of owning a business.
From employee claims and leave requests to overtime submissions, payroll tasks pile up quickly. These repetitive duties are an inefficient use of your employees’ time.
“Not surprisingly, many business owners say bookkeeping and taxes are the worst part of owning a business.”
This time would be much better spent focusing on strategy and growing your business. That’s why payroll software is a must for every company. By reducing the time your employees spend on tedious administrative tasks, you’ll significantly boost productivity.
Easily Generate Reports
A robust payroll system with custom reporting will help you better understand your business and your employees. When all employee information is housed in one centralized place, you can easily keep track of everything.
And when you have the tools at hand to generate insightful payroll reports, you’ll be equipped to make informed decisions about employee compensation. For example, data about employee turnover can reveal issues like low employee engagement before it gets out of control.
Simply put, payroll software makes your employees’ lives easier. Preparing employees’ salary slips will become a much simpler process that can be accomplished in a few easy steps. It automates the process of calculating taxes and deductions and eliminates administrative headaches.
Manually processing payroll is not only time-consuming but also prone to human error. When you have to account for overtime, vacation, benefits, tax withholdings, and salary structures, payroll processing gets complicated. Fixing mistakes can be time-consuming, costly, and stressful.
Invest in payroll software to prevent errors before they happen. You’ll avoid displeasing
tax authorities and your employees, as they will notice errors in their salary slips. You’ll save costs as well since the penalties for payroll errors are often more expensive than the cost of payroll software.
Payroll software can ease your compliance worries. Keeping up with legislative updates is a difficult but crucial part of the payroll process. You can’t let anything relating to compliance slip, or you’ll risk facing severe fines and penalties.
Automation and real-time calculations help you maintain payroll compliance. You’ll enjoy peace of mind knowing you’re always paying your workers and taxes accurately and on time.
You don’t want to miss out on these nine payroll services—they’ll make your work life a whole lot easier.
When you partner with a payroll provider, some services are a given. Your provider should calculate how much employees should be paid each period, taking into account shift differentials, overtime, holiday pay, and tax and benefit deductions. This is the bare minimum a payroll provider should offer.
Direct EFT Payments
If you’re still paying your employees with checks, it’s time to upgrade your processes. This practice is time-consuming and costly, and your employees probably don’t appreciate it. Today’s workforce wants immediate payroll processing and anytime access to their payroll information.
Plus, you lower the risk of errors, fraud, and lost checks when funds go straight into your employees’ bank accounts. Improve the process for both you and your staff by switching to direct EFT payments.
Employee time management affects payroll—the two go hand in hand. To take full advantage of payroll services, get an integrated solution for time management.
If you’re scheduling employees and tracking time in one program and managing payroll in another, it’s time to streamline your processes.
Benefits administration doesn’t affect payroll as much as time management does—but there is still some crossover. Your employees might pay for some of their benefit premiums, so combining these two services will improve your operations.
You need to maintain compliance with SARS when it comes to wages, holiday pay, taxes, and more. Your provider will adjust your payroll as needed to ensure you stay compliant. Non-compliance can result in hefty fines and penalties—which your provider will help you avoid.
Payroll Tax Management
One in three small businesses spends 80 hours each year on taxes, including payroll taxes!
Payroll tax management is one of the more complex payroll tasks. Especially as your business grows, keeping all your tax papers in order can be difficult. There are several payroll taxes to manage including income taxes.
Let your payroll provider take this burden off your shoulders. They’ll deduct and report the tax amounts, then pay the funds to SARS.
Having access to different types of reports makes it easier to evaluate your payroll. The right provider will make it easy to pull reports, so you’ll never have to go hunting for information again. You should also be able to customize reports to pull only the information you need.
If you’re trying to decide what benefits to offer, for example, you can run a report to see how many employees are making claims. Alternatively, knowing how many payroll errors you’ve made in the last year will help you identify areas for improvement.
Getting advice from a team of experts is one of the most important payroll services. You want answers to your payroll questions and help to better manage your processes.
You don’t want to miss out on gaining access to expert guidance and advice. When you can quickly find clear, accurate answers to your payroll and HR questions, you’ll be able to manage your payroll much more effectively.
“Getting advice from a team of experts is one of the most important payroll services.”
A Holistic Solution
Another one of the best services a payroll service can offer is a holistic HR solution. When your provider can look after time management, benefits administration, and compliance management, you can manage your payroll and HR activities better than ever before.
For both the HR and payroll functions to run smoothly there must be collaboration between the two. Having one central system to house all your HR data takes the pain, time, and errors away from workforce management.
No more logging into separate systems, duplicating data entry, and searching for employee information. Get a completely consolidated HR solution.
What Makes our Payroll Services Unique?
- Unlike other payroll services who charge a base fee plus surcharges for every step in the process, Skytrax Payroll has an ‘all in’ approach that allows clients to know exactly what their costs are going to be before any payroll is processed.
- We understand the legalities and compliance of employment. Our experts are trained, certified professionals with years of experience dealing with every imaginable scenario. When you partner with Skytrax Payroll Services you engage these experts as part of your team.
- Most payroll services provide HR support via online reports and PDF’s. At Skytrax Payroll Services our HR specialists take an active interest in coaching clients about the ever-evolving legislative rules. Our support is the human kind, so you can ask questions and get real answers.
- Other payroll services typically accept the payroll data provided to them by their client simply route this data to their processing machinery and print the payslips. At Skytrax Payroll Services we review all payroll data before processing to ensure compliance and discuss any anomalies with our clients offering advice on best practices.
- We take care of ALL of our client’s submissions, not just the payroll tax. We do not leave our clients having to wade through their payroll reports to remit their own worker’s compensation and other documentations burdens. We take care of it all.
Benefits of our Payroll Service
Affordable Payroll Packages from only R70 per month!
In the Cloud
Your Business can be located anywhere in South Africa – great service is guaranteed. Payslips will be emailed to you on a monthly basis. EMP201s will be submitted to SARS.
You will receive on-going Support from us.
No matter how big or small your Business, or the Industry of your Business – we have a tailor made package. Our contract with you is month-to-month and can thus be adjusted on a monthly basis.
Payroll processing can take up a lot of company time if you let it. What may seem like a simple business function is actually quite complex and multi-faceted. Trying to do everything on your own could spell disaster.
If you want to streamline the process, partnering with Skytrax Accounting and Payroll Services is a guaranteed path to success. Stop struggling with payroll—switch to a holistic HR software solution and manage your processes more effectively.
Don’t just take our word for it—see for yourself!
Get a scalable payroll solution that fits your business.