Automation can help South African businesses decrease the R7,2-billion lost to administration, writes Gerhard Hartman, vice-president: medium business at Sage Africa & Middle East.
We’re racing towards the end of another tax year, which means that we’ll soon hear about the Finance Minister’s proposed changes for the 2020/21 tax year. Not too long after Minister Tito Mboweni unveils changes to PAYE and other taxes during his budget speech on 26 February, the season for Employer Annual Reconciliations will open.
Getting up to speed with the latest tax developments and filing annual reconciliations needn’t be stressful or time-consuming. Today, businesses of all sizes can benefit from cloud-based payroll software that makes PAYE and other payroll administration processes a snap.
Why is that important? Because the Sage Productivity Tracker shows that unnecessary admin costs South African businesses more than R7.2 billion a year, and automated software can help reduce this burden.
Here are five reasons an automated payroll solution is a must for every company:
Save time and money
Managing employee records, performing payroll calculations and issuing payslips can be a massive drain on your time if you’re using manual processes such as spreadsheets.
An automated solution can calculate the complex formulas for the various statutory deductions and generate compliance reports with the click of a mouse. Automating can free up several hours of extra time a month you can use for more strategic initiatives.
Cure tax headaches
Thinking about monthly employee tax submissions and annual recons is enough to give a business owner a cold sweat.
An automated solution makes it simple to comply with tax regulatory requirements such as compliance reports. It also makes it easier to keep track of annual changes to tax laws and regulations that impact on payroll tax calculations.
A good payroll software solution will be constantly updated to align with the latest tax laws and tables, so you don’t need to update your spreadsheet formulas or learn to make new manual calculations every year. For example, if tax brackets change, your software vendor will take care of it for you. This also reduces the risk of human error.
Whether it is the Monthly Employer Declarations (EMP201), Interim or Annual Employer Reconciliation Declarations (EMP501), Tax Certificates (IPR5) or UIF Declaration to the Department of Labour, an automated payroll solution will cover your legislative reporting responsibilities.
Making mistakes in your payroll calculations can cause big problems for your business. It might mean spending hours combing financial records to find an error. Or it could lead to underpaying or overpaying an employee or miscalculating their leave, which can be bad for workforce relations.
Even more seriously, making a mistake when a mistake when calculating PAYE or filing statutory reports can lead to fines and penalties from SARS. With an automated system, most human errors in data capture or calculations be eliminated.
Scale for growth
While you have one or two team members in your small business, it might seem simple enough to do their payslips and calculate their PAYE. But as your business grows, along with the demands on your time, this will become more and more of a drag on your resources.
Payroll software allows you to scale for growth. With some cloud solutions, you can pay per payslip per month and easily add more employees as you need to.
Close loopholes for fraud
Payroll fraud is one of the most common white-collar crimes in the business world, and it is an especially significant danger to small and medium businesses. A robust payroll solution puts tight financial controls in place. It helps to reduce the risk of payroll fraud by giving managers better visibility into transactions, providing an audit trail and providing a set of controls, checks and balances that help to prevent fraud.
With all the other challenges on your plate, worrying about the payroll should be the last thing on your mind. An automated solution can take care of payroll admin for you, so that you can focus on growing your business and adding value for your customers.