Have you recently started out a business and hiring employees for the first time? Scratching your head and wondering: “What is Payroll?”
Let’s start off by defining just that. Payroll refers to all the financial records and data pertaining salaries, wages, overtime, bonuses, deductions related to entities, employees, owners or partners paid for services provided during a specific period of time. Such information is generally required for the filing of taxes and submission of regulatory forms. It may seem simple and easy, but Payroll itself contains a lot of sensitive information that needs to be handled systematically and accurately. Every business needs a Payroll system in place, even if there’s only one or two employees.
We talk a lot about the importance of a Payroll Software and how it contributes to efficiency within Human Resource(HR) operations. However for those of you who are just starting out and haven’t had much exposure to how Payroll is done, the actual task of processing your business’ payroll can get increasingly complex and difficult to manage. As a Payroll Software provider we’ve seen what it takes for businesses to achieve an efficient Payroll system, so whether or not you intend to process your business’ Payroll through Payroll Software, Excel, or even on paper, here are some key steps that you can take to build the best Payroll system for your business.
Key Steps when handling Payroll
Having a detailed record of each employee is the first thing you want to start with. Aside f requirements, building a solid employee database is essential for any Payroll system to function. Proper management of employee records can also contribute to you being able to effectively monitor the performance and productivity of your employees.
Key components in Employee Records that you’ll want to include:
Now that you’ve got your employee database ready, the next step is putting together the components of employees’ salary. Some key considerations to factor in:
It’s always a good idea to classify your employees, whether they are full-time, part-time or contract, with there being different tax requirements and minimum wage regulations you’ll want to adhere to. Additional components that must be factored into employees’ salary:
Employees cannot go too long without a salary, and you can’t possibly be processing Payroll say, every day. It’ll be a complete nightmare! Take note however, that employees’ salary must be paid within 7 days after the end of the salary period – and non-payment of salary will be considered an offence.
For your employees to know when to and what to expect on payday, you must establish relevant payroll policies that are clearly communicated to, and understood by all of your employees.This will include:
Now that you’ve got it all set up, it’s time to pay your employees. Which brings me to the next point for consideration- Payroll logistics. Depending on your company’s preference, payroll can be delivered via cash, cheque or GIRO.
If there is no proper documentation of payroll history, it can be quite difficult to answer to management when an issue pertaining to past payroll data crops up at some point in the future. Common situations where businesses require to dig up past payroll records include difficulties in balancing accounting books within the finance department, and discrepancies in salary payments.
Avoid unnecessary penalties of your business’ taxes by constantly keeping yourself updated with the latest regulations and submission dates.
Of course, a Payroll Software or Service Provider can come in very handy when you’re caught up with other business matters, and lack of manpower to manually check the Payroll process from end-to-end. However outsourcing Payroll services and running Payroll through a software does require a considerable investment, so you have to think about your own business needs and decide what works the best for your business. Ultimately, it is recommended to keep it as simple as possible and always make sure your process is constantly reviewed and updated to be in compliance with employment regulations at all times.
One cannot hope to continue business for very long without using basic accounting and bookkeeping. If you are starting with your company, it may be possible for you that you do all the accounting and bookkeeping yourself, but as your company shall grow, the need for proper and professional accounting will gradually increase.
Thus it is advisable that you should hire an excellent team of accountants. It is entirely understandable that a start-up will not have enough funds to hire an accountant and in such a case, they can hire a part-time accountant who would suit the needs of the company and also keep the finances in check.
“ALYA” is one of the reputed chartered accountant firms in Dubai which will understand your business needs and will provide you with financial advice accordingly. At “ALYA”, we strive to help you by providing accounting and bookkeeping services, both traditional in-house accounting and outsourced accounting and also offer solutions for your business. For more information, do contact us today – we’d be happy to help.
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