The daunting complexity of today's labour and tax environment in SA means that an automated payroll solution has become a necessity rather than a luxury for small and medium enterprises (SMEs) that want to ensure ongoing sustainability of their businesses.
This is according to Anton van Heerden, managing director for Sage VIP and Sage Pastel Payroll & HR, who adds that SMEs today need to cater for a range of deductions, levies and tax incentives in their payroll calculations, ranging from unemployment insurance fund, the skills development level to the employment tax incentive.
Also, they need to keep track of South African Revenue Service regulations' yearly changes that will impact on their payroll tax calculations.
Therefore, it is difficult for the person in charge of the payroll to stay ahead of the constant changes in SA's regulatory landscape without a solution that takes care of keeping records and doing payroll calculations, says Van Heerden.
He points out that if businesses use an automated payroll solution, it will take care of calculating complex formulae, generating the relevant compliance reports and keeping accurate records.
The person responsible for the payroll will be spared from reams of manual paperwork, says Van Heerden.
Furthermore, a sound automated payroll system is critical in managing the business's financials and planning around its resources.
"Without an automated payroll solution, most businesses will find it difficult to perform accurate calculations and file submissions with SARS on time," says Van Heerden.
The risks of getting it wrong include censure or fines by the tax authorities because of incorrect calculation or payments.
He believes the SMEs' payroll environment is likely to get more complex in the years to come, since government is putting more focus on governance and tax compliance than before.
To Van Heerden, payroll software helps to reduce risks by giving managers better visibility into transactions, providing an audit trail, and providing a set of controls, checks and balances that help to prevent errors and fraud, preventing financial losses.
A good solution will also feature bank account and ID number verification from within the system, helping to reduce opportunities for fraud, he adds.
According to Van Heerden, payroll solutions also help to hone the strategic focus of the HR department.
They free HR and payroll managers from the drudgery of paperwork so they can focus on developing and motivating employees, he says. In addition, they provide management with information they can use for better business forecasting and planning.
Van Heerden recommends that businesses choose a solution built on flexible modern technology, with full local support that is kept up to date with relevant labour and tax laws and one with integrated employee self-service functionality.
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