Managing Small Business Payroll
Most small business owners find payroll frustrating and time consuming. Payroll is vital in any business, any issues in the payroll function can lead to low staff morale. Mismanagement of payroll can result in employee loss and future business could be in trouble.
Here are 15 Simple Tips to manage your Small Business Payroll:
1. Register as an Employer with department of labour.
All employers are required to register with the department of labour. Employees have to be registered with the department of labour as soon as the company employs them.
2. Register for employment taxes with the receiver of revenue.
Payroll taxes must be paid over and reflect with the receiver by the 7th of the month (if on a weekend the business day before the weekend)
3. Know your deadlines
Plan in advance. This allows you the time to resolve any potential issues that might pop up. This way you can still make the payrun every month on time and at the right time. It also ensures your annual reconciliations run smoothly as you are prepared.
4. Decide on your pay cycles.
Set up your pay cycles, monthly, fortnight etc.
5. Decide on the job grades and the related hourly rates.
Job grades can be set with hourly rates in order to calculate pay automatically each month. This will be influenced by whether the employee is full time or part time.
6. Read the relevant labour laws & legislation as this will be vital to avoid HR issues landing at the CCMA.
Labour legislation is vital to understand. If you are not following this then your employee has recourse with the CCMA.
7. Set up a payroll system and invest in payroll software
Payroll systems and payroll software can calculate taxes automatically and make the reporting to the receiver and issuing of pay slips much faster. The right payroll schedules is important for an audit trail. Payroll software can save a lot of time.
8. Outline payroll process, policies and procedures.
Policies and procedures are important so that everyone in the organization understands the employment policies of the organization.
9. Implement an automated time tracking system.
Automated time tracking systems can be integrated with your payroll system to reduce manual data capturing.
10. Track your cashflow to ensure cash is available for the pay run.
Having the cash ready in your bank account to pay your employees is very important, make sure you are tracking your cashflow often.
11. Maintain employee records as required by legislation.
Employee records are required to be maintained according to labour laws.
12. Lastly make sure you issue pay slips before payment (required by law).
Legislation requires pay slips to be sent before payment to the employee, this gives the employee chance to review the pay slip and raise issues before payment.
13. Make sure you pay the payroll taxes before the tax deadline to avoid penalties and interest.
If not paid on time a company will be liable for a 10% penalty on the payroll taxes. This is a big waste and can be avoided with good planning. Tax deposits should be made timeously to avoid headaches.
If you manage payroll then consider appointing an accountant to assist you with your payroll for your small business.
14. If you can then outsource your payroll to a payroll service provider
This firstly makes sure no one in the organisation knows anyone else's salary and also ensures the payroll is free from potential error or internal fraud. A reliable outsourced service will ensure everything runs smoothly each month or fortnight without you having to worry about the admin of payroll.
15.Software Training
Make sure your team that deal with the payroll and use the systems have the correct training. Doing this upfront will save you a lot of headaches further down the line.
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