Payroll for businesses, both startups, small and big companies, can be referred to as a hamster wheel that keeps spinning, requiring an ever-increasing effort. From managing time, attendance, payroll taxes and workers' compensation, it is often challenging even for the most earnest business leaders.
Most entrepreneurs go into business with the goal of keeping their products or services competitive, retaining and keeping clients happy and attracting more potential clients. They often don’t take into account that managing payroll is a critical aspect of running any business with employees, and that it is not an easy task, yet vital to get it right.
According to Pennine Kayijuka, chief human resources officer at Makena Initiative, managing Payroll requires great precision, while it does not remove other daily accounting tasks making it hard to concentrate on.
Employers have to collect tax (income tax, social security tax, etc) on behalf of the government, while rules to calculate how much to collect are complex and constantly changing.
"When handled manually, calculating wages, taxes and other payroll deductions can be a time-consuming process. If the tools used to manage payroll aren’t integrated with the accounting system, you’ll need to enter payroll data multiple times to keep the company’s accounts up to date, to ensure employees are paid accurately and that the company complies with all regulations. So anything that simplifies and automates the tasks of payroll processing is very welcome,” she explained.
Businesses can opt for a third party provider for payroll services. A payroll service provider is a company that focuses on processing payroll calculations, payroll tax statements, year-end taxes, among others.
Many companies prefer to use payroll service providers to help ensure their employees and taxes are paid accurately and on time. The providers ideally should also help employers meet filing deadlines and deposit requirements and streamline business operations.
A full-service payroll provider goes beyond the basics of payroll calculations, handling deposits and withdrawals, withholding and paying garnishments, and new-hire reporting. It takes into account all details from hours worked, shift differentials, overtime, holiday pay, taxes, and Social Security and benefit deductions. It will also file any sort of state and local taxes.
According to Beatrice Mujawayezu, Business Services and Outsourcing Director at BDO Rwanda, using payroll providers ensures more professionality on the side of the organization.
BDO Rwanda is one of the top providers of comprehensive outsourcing and advisory services across the full spectrum of finance and accounting functions in Rwanda.
Mujawayezu asserts that payroll clients are more satisfied by a full package of services that includes cleaning the raw data and verifying timesheet information, payroll computation (both Net salary and statutory deductions) using different tools (software), sending payroll list to bank for processing the payment and directly deposit the salary to appropriate bank account, tax filing and tax payments, and reporting back to the client.
"Today’s fluctuating talent needs get automated with integrated software for recruiting, onboarding, performance management, compensation, training & development and succession planning,” she said, adding that data-driven insight into the workforce could improve strategic Human Resources planning.
Individuals can learn how to do payroll, even if it may be a little bit more complex. Failure to correctly calculate the taxes could end with significant fees and penalties, at minimum.
It is either you do it manually, perform the calculations or purchase a payroll software program and properly use it. Or engaging with a professional and experienced payroll provider to eliminate the time and worry of accurate and timely payroll processing.