Having seamless payroll services in your business may sound like an easy feat, yet we often find that for growing businesses, this is where mistakes are made. This is mainly due to the correct processes and systems not being in place. These errors can cause serious consequences, from damaging employee morale to heavy tax penalties for late or incorrect payments.

As inaccurate systems are the main cause of payroll mistakes, having an automated system is essential to avoid calculation errors in items such as salaries and deductions. Keeping track of all relevant deductions and the changes accompanying them can be challenging. Furthermore, these changes need to be tracked, filed for use when submitting annual tax returns and retained for future reference. Payroll changes incorrectly processed will adversely impact payroll tax calculations and potentially expose the employer to compliance irregularities with SARS.

Automating this process allows payroll employees to spend their time on other important processes to aid in business growth, rather than allocating endless hours to compliance and admin. These systems also help employers keep track of their employees leave days and assist in handling authorisation administration. When leave days are not kept track of, employers are liable to errors such as incorrectly issuing paid leave and other errors which may have greater financial implications.

Implementing necessary checks and balances to avoid payroll fraud is essential for small and medium-sized businesses, as this most often occurs unintentionally. The best way to do this is to keep payroll responsibilities separate to avoid errors.

Another minefield for incorrectly managed payroll systems is the allocation of employee travel allowances. Since travel allowances are monthly occurrences, the calculations can be difficult to do correctly and can easily result in employees paying too much or too little tax. To help avoid mistakes, employers should ensure that they are using the correct IRP5 codes and implement automated systems to capture data correctly.