In this article, we will go over the payroll processes that can be outsourced and the owner’s role in each.
- Payroll Input
- Sign Off Process
- Payment Upload
- Ad Hoc payroll
- Extra Costs
- Advice from Payroll Outsourcing Professionals
Lastly, we will close with
Please Note: The payroll processes listed will give you a broader understanding of the general process. This article cannot accompany variations or all the unique quirks that are out there. If you are not sure what your business needs are, then this article is a great place to start.
1. PAYROLL INPUT
The first step in payroll processing is the gathering and inputting of payroll data. This is data that affects the payslip, employees, or company. Such as increases, additional deductions, contribution changes, medical changes, employee updates, etc.
In some cases where employees cannot complete items in their ESS (employee self-service) the payroll service may handle leave applications, profile changes, and claims.
Owners Role: payroll input
Your Role in payroll input is to gather this data and then submit it to your payroll service provider on a given date, usually the 17th of a month for monthly Salaries. To make this process easier you can encourage all data from your employees to be submitted through ESS.
2. Sign-off Process
The sign-off process is crucial for doing final checks on the payroll system. To make this process easier you can make payslips available for viewing/checking by the employees. Then if any queries arise they can be dealt with before payments are made. The closing date for this is usually the 20-22 depending on your payment date.
Another reason this step is so important is that it’s a safety measure taken to pick up possible mistakes that affect the company’s finances and even fraudulent activity within the company.
Owners Role: Sign-off Process
Thoroughly check and confirm data accuracy and make last queries, if any. Lastly send a sign-off either in writing or with a signature, dependent on how your payroll service provider works.
3. PAYMENT UPLOAD
There are numerous payments to be made each month such as Salaries, PAYE, UIF, Medical and Provident Contributions, etc. With technology, we can streamline this process with an ACB file, which is a password-protected file that is downloaded from your Payroll System and then can be uploaded into the Company’s bank to make the payment to the accounts listed.
Owners Role: Payment Upload
It is advisable to limit access to the Company’s bank account. It may be preferable to receive the ACB file and then upload it to the bank. Otherwise, the service provider can do this for you as well.
A great service that has made this easier and more secure for many businesses is NetCash. With NetCash the Owner of the bank account can stay in control easily by reviewing and either accepting or declining any ACB files that get uploaded.
Looking to Get Started with Payroll Outsourcing?
Reporting plays one of the most important roles in delivering the results of all your payroll input and processing to the relevant services and authorities. An accurate report is what keeps your company compliant.
There are different reports needed monthly, quarterly and yearly, and of each, you are required to keep a record of. Such as:
- Monthly Reports – EMP201, Company recon, Provident recon, etc.
- Once a year – Employment equity, COIDA
- Quarterly – Stats report
Remember to consider that some reports will require action to be taken, such as EMP201 to SARS, or Equity Reporting to the Labor Department.
Owners Role: Reporting
Most often you will receive your relevant payroll reports monthly. You may choose for your Payroll service provider to handle the reporting to SARS and other third-party providers such as Medical Aid, Provident, etc. In this case, your role would be very minimal and require oversight and record-keeping. Otherwise, you may handle the reporting yourself.
5. Ad-hoc payroll Request
Ad-hoc payroll requests are those requests that you need help with when they come up but are not necessarily frequent or common.
An example of such a situation may be that you got an unusual notification from SARS and you ask your payroll provider to tend to it.
Owners Role: Ad-hoc payroll Request
Communicate with your payroll service provider, and understand if there will be an extra charge or not.
Get Started with Payroll Outsourcing
There may be extras that are not part of the service agreement that may require more time from you. Let’s take a look at how knowing your service level and extra costs can help you.
Know Your Service Level
Not every company is the same and therefore requires some customized service. However, with that being said there are generic needs as well. And so payroll service providers may offer different packages for you to choose from or they may work on a customized quote or a combination of the two.
Owners Role: Service Level
The most important step for you to take is to complete a thorough needs analysis before opting in for a service. As this will ensure that your payroll service provider will be able to serve you correctly and you will eliminate space for unexpected billing.
Extra Costs: Inaccurate Data and Financial Year End
The Financial year end always comes with extra checks and in some cases correcting incorrect or missing data.
To complete the financial year it’s not only important for the financials to be accurate but also for employee data which is crucial for authorities such as SARS that need to know your employees’ finances. For example, an incorrect ID or tax number can cause issues with your submission.
Owners Role: Inaccurate Data and Financial Year End
Check data for accuracy before payroll input items are submitted monthly and at Sign off.
Tip: Towards year-end encourage, your employees to go on to ESS and check their details and inform you of any faults.
Advice from Payroll Outsourcing Professionals
- Be on time.
- Give accurate information the first time.
- Have excellent management and communication.
- Have a backup of the data you send and have easy follow a trail.