How Do I Implement A Payroll System For My Business?

/

If you have staff, you need to make sure they receive a payslip every month and all deductions are deducted and paid over to SARS on time and correctly, otherwise you run the risk of penalties and interest from SARS and possible unhappy staff members if they don’t receive a payslip and IRP5 at the end of the tax year.

Follow these 13 steps to successfully implement a payroll system

Step 1: Get all the details together of all the staff members that will be included in the payroll. Even staffs that earn less than the monthly threshold of R6 312.50 (2017: R6 250) and also shareholders who take a monthly remuneration, should be included in the payroll.

Details required:

  • Full name and surname
  • ID number or passport number
  • If not South African, nationality
  • Address
  • Postal address
  • Income tax number
  • Job level
  • Gross remuneration
  • Non-cash benefits i.e. medical aid or travel allowance

 

Step 2: Use a payroll system or get an external firm to do the function

3 Benefits and disadvantages of using a cloud-based payroll package:

Benefits

  • You can access it anywhere.
  • You can use a variety of devices to access the internet/cloud system.
  • Gets backed up so no downtime in terms of lost data and you don’t need to worry that it needs to be backed up.

Disadvantages

  • If you don’t have internet access you can’t connect or access your payroll system i.e. can’t process payroll.
  • There might be security issues if the username and passwords are not kept safe. Sometimes, web browsers remember usernames and passwords and this could be a security risk.
  • It can be expensive to use if you have a lot of staff members because some of these payroll systems charge per staff member.

 

3 Benefits and disadvantages of using an external service provider:

Benefits

  • You can send the updated details directly to them and they must process everything i.e. Time saver
  • You don’t need to carry the software costs and annual licensing i.e. Cost saver
  • You don’t need to deal with possible queries or complicated calculations or SARS i.e. Penalties and interest

Disadvantages

  • It can take time to do, and if you send it at nr 99 there might be a problem in finalising it on time.
  • There is a potential loss of control
  • Inconsistency in the quality of work if different staff members do the payroll at the provider.

Step 3: If you are using your own payroll program, learn how the program works first. Maybe go on a  training course. Read up about it. If you are using a service provider, make sure all the contracts are in place and that everything is formally in writing and signed before you start.

Step 4: If you are using your own payroll package, input every employee’s details. You will need to process all the employee details first before you can start doing a month’s payroll.

If you are using an external service provider, send all the details from Step 1 to them including the employee’s contracts and ID documents.

It is important to get all the details processed for all employees. This will help you when you do the EMP501 reconciliations and IRP5 at the end of the year.

Step 5: Process a monthly payroll run

Step 6: If you are doing your own payroll, review the payroll. Maybe ask your supervisor to go through it with you if it is the first month you are doing this.

If you are using an external provider, review the reports received from them. Don’t assume they know better. Remember, chances are that this is their first dealings with you as a customer and they are also learning. And they are also just human ;-)

Step 7: If you are happy with the reports, approve them. If there are any queries, follow it up now. Don’t leave it till next month because if next month is the next tax year, you might not be able to fix it.

Step 8: Load the net payment per staff member on the internet banking or use an ACB file to import the payroll batch onto your internet banking.

Step 9: Agree on the amount loaded for payment with the payroll reports. Make the payment

Step 10: Agree on every payment that went through the bank with the payroll reports. This is usually done by the bookkeeper through a salary control account.

Step 11: Follow up on all differences.

Step 12: Submit and load the EMP201 for payment on SARS e-filing. You will need a PAYE number from SARS to load these returns and payments.

Step 13: Release the EMP201 payment.

If you have any questions or queries, please don’t hesitate to contact us at

contactus@anlofin.com or on  011 658 1324