An essential part of managing a business, irrespective of size, is that of effective payroll processing. The time it takes to calculate wages, leave days, overtime worked, commissions, and benefits can eat into valuable core critical business activity time. Even if the company employs personnel to manage the payroll processing, it still means extra allocation of resources that could have been used on profit generating activities.
Recent trends in business office administration show that the three areas in which businesses are most likely to outsource and benefit from such outsourcing are:
The above functions require a certain level of expertise and are strictly regulated by statutory requirements. Managing the functions require keeping up to date with latest legislation, changes in regulations and thresholds and rules regarding the steps in each function. The above means having to employ people that are knowledgeable and trustworthy in each of the areas of expertise. It also implies more cost to company regarding management of the functions.
For smaller businesses with only a few employees, the issue becomes even more prominent. The business owner, in an attempt to save on costs, may very well try to handle all the functions in addition to managing the business, which translates into the loss of growth opportunities. Focussing on the office administrative side of the business takes the focus away from the market and essential activities to position the business favourably.
The question of “Does a business need an easy payroll outsourcing solution?” can thus be answered with a resounding YES! Part of operating in the modern business environment entails making use of technology and new methods for reducing pressure on the business resources.
Those companies that embrace the advantages of technology to streamline functions and outsource functions such as payroll, bookkeeping, accounting, financial reporting and tax management to expert companies, gain a competitive edge. They are able to spend more time on business growth and to reduce their office overheads. Since profit generating is at the core of successful businesses in the capitalist society in which we live, it makes sense to minimise costs associated with non-profit generating activities.
Payroll management is complicated since the UIF, SDL, medical aid contributions, and pension fund contributions must also be accurately calculated and reflected on the salary slips of employees. Salaries must be paid on time and accurate record of such kept. In addition, the PAYE of employees must be indicated and deducted. This must be paid to SARS and the annual employee tax certificates must be issued. To add to the complexity of the above, accurate paid leave must be recorded and indicated. Bonuses, study allowances, travel allowances and more must be calculated.
When the function is handled in-house, the employer and all people working with payroll must stay up to date with the strict requirements of the Basic Conditions of Employment Act, in addition to all SARS regulations pertaining to PAYE and related tax returns. It implies the need for additional training and more risk of non-compliance. The latter can lead to heavy penalties and even prosecution of the employer. By outsourcing the function, businesses consequently increase their compliance profile and reduce the costs of training.
With online and computerised payroll management solutions available, businesses are able to provide access for employees to their leave applications and ability to update personal details. As such, any business in need of an easy payroll outsourcing solution will benefit from the streamlined and cost-effective outsourcing solutions offered by The Tax Shop franchises throughout South Africa.