The term ‘payroll’ can refer to various different things. It can mean the actual employees that you pay (staff on your payroll), or it can refer the act of calculating and paying your employees. Either way, when you talk about payroll, you’re talking about the salaries that you pay during each pay period.
This might seem fairly straightforward to calculate. Many employees across the country will have a set amount that they earn each month. Yet, even with fixed salaries, there are certain deductions that must be made from each payment, making it necessary to calculate payroll per employee for each payment period.
What to Consider When Calculating Payroll
Here are some of the factors to consider when calculating payroll:
There are those employees whose salaries fluctuate based on commission or hours worked. These salaries must be calculated for each payment period as they will always be different. But, fixed salaries also need to be calculated at each payment period, taking any unpaid leave or overtime into account.
If you offer financial help with medical aid, retirement annuities, employee discounts, car leases, etc. these will have to be calculated as well. The value of the deductions might fluctuate (such as in the case of discounts on purchased items), meaning that you’ll need to recalculate the amount payable for each payment period.
Some companies don’t take tax off their employees’ salaries and instead leave this up to the employees to do. If your company does, however, deduct tax for your employees, this will have to be deducted ahead of payday and submitted to SARS on behalf of the employees.
- Bonuses or Commission
If you pay your employees commission on sales or you give bonuses, this extra money will have to be added to the right employee’s salary before it is paid. Once again, this makes it important to calculate payroll before each and every payment period.
The Advantages of Payroll Software
Doing all of the above manually is not only time consuming, but it leaves the possibility for errors. So, in order to prevent against inconsistencies and make the payroll process much faster, the best option is payroll software.
Payroll software calculates all of the above for you, and it can produce payslips simultaneously. It is even possible to automatically calculate and submit tax returns using this software.
Payroll software dramatically cuts time expenditure and administrative costs, and significantly reduces errors, making it an asset for any business.
To learn more about the right package for your business, be sure to contact QuickBooks today and ask our experts about Quick Payroll!