Payroll: the underrated service that makes a difference

The two-pot retirement system has opened a whole can of worms that left a very bitter taste in the mouths of unsuspected workers.

Workers discovered that even though money was deducted from their salaries, the money wasn't paid over to the pension fund. How could this happen?

First of all, for many this didn't come as a shock or surprise. Remember during Covid when workers discovered that bosses didn't pay the Unemployment Insurance Fund (UIF) and they couldn't claim UIF benefits? The only people who suffered were those who were left without an income at the most desperate times.

What would have happened if those workers waited until their retirement, retrenchment or resignation to find out there is no pension? Can you imagine how devastating that would have been?

Part of running a business is making sure that your employees get paid on time, and this takes planning and money. That's why it's so important to get a payroll service provider and a bookkeepers or accountant who can guide you through the whole payroll process.

Payroll management is one of the most crucial but underrated business service. When you employ someone you are holding their dreams, their future, and the well-being of their families in your hands. Their salaries pay for bonds, car installments, school fees, food, clothes, petrol and everything else they buy to maintain their standard of living. You are making a commitment to providing in the needs of people you'll probably never meet. It is both a burden and an obligation.

If you're doing the right thing by paying your employees on time and paying over the contributions and the deductions to the relevant authorities and funds, you are touching and changing the lives of countless people whose names you'll never ever know.

But too many employers think issuing a pay slip or salary advice is enough. There are those who don't even give a pay slip; they just pay employees out of their back pockets without a thought as to what this means to the people who are making it possible for them to maintain their lifestyles.

Some South African business owners don't want to invest in a payroll service provider. They think too little of their employees to want to invest money and do the right thing. I will even go so far as to say, that their only priority is their own progress and pockets, not the people who are making it possible for them to buy the house and the car they so happily boast about.

It's only when the get threatening letters from the South African Revenue Service that they want to start doing the right thing. Then it will cost money and time to prepare the payroll records.

This can be avoided by starting off doing the right thing. Find a professional payroll service provider.

Once your workers are registered on a payroll system, you are ready to file every month. But that is only the first step. Once you've filed you have to pay UIF and PAYE to SARS , and you still have to pay the pension fund contributions.

Before you employ an employee, an accountant can help to calculate how much money you must have every month to pay the salary of your employee and pay the taxes, UIF and pension fund contributions over to the right parties.

Don't make the mistake of only calculating the net salary. As as employer, you are responsible to make provision for the gross salary - that includes the basic salary, PAYE, UIF and all other deductions and contributions. These calculations are done using payroll software or by using Excel formulas.

Even though an employee will never see gross salary in their bank account, the employer must still pay it from the business bank account. SARS, the UIF and the pension funds need their peace of the pie every month, and as the employer you are responsible for providing the slices.

This is where many employers are falling short. They simply don't have the money to cover the gross salaries because they never calculated it. They never even considered that UIF and taxes must be paid on behalf of the employee.

In the process they harm their company and their employees because of ignorance and not getting the help of a professional.

Your employees are the cornerstone of your business. The biggest thanks you can give them is to pay their UIF contributions, PAYE and pension fund contributions.

Remember, part of being a boss is taking care of those who give you their time and expertise to help build your business. And one of the best things you can do, is to make sure there are no nasty surprises when they need the money they've worked for.

If you need help with your payroll, send me an email at [email protected]