Jun 10 / Upturn

Do you really need a Payroll?

Do you really need a Payroll?

Drag to resize
If you belong to an organisation of, say, more than 10 people, you've probably heard one of your colleagues complaining about the headache that payroll computation gives them. And if you're not an accountant or HR professional, then you probably don't understand what the fuss is about. How is handing out monthly salaries such a task? If it's so hard, then why don't they just hand it out manually instead of subjecting it to a system?

If you're asking these questions, then you probably don't know that payroll is meant for more than just detailing how much salary is to be paid at the end of the month to each employee. You see, a payroll is the breakdown of the overall compensation that an employer pays an employee directly and indirectly. What that means is, there are "direct" benefits (like allowances) that accompany what you know as "salary", and these are all accounted for by the payroll. There are also "indirect" benefits that an employee enjoys just by being part of an organisation, which are not included in the monthly salary. You might have heard of "life insurance"? Yup, this is one of them.
These figures have to be accounted for because they all add up in some way to the salary an employee receives, and apart from that, you need a place to extract your data from when the government comes calling. The payroll helps to organise your tax schedules and other important reports that let government officials know you've been keeping with the law.

If you still don't get it, (na wah for you o), let me put things in perspective for you. A payroll is important to:
  • Break down and separate your direct and indirect compensation and benefits.  A payroll is essentially a record of staff salaries to which you can make quick reference when needed. Don't you just love it when things are organised properly so they are easy to find?

  • Account for every statutory contribution and keep you compliant with regulatory remittances. You don't want to be caught with your pants down when the ITF officers come to check the books, do you?

  • Calculate your taxes. I hope you know that taxes are graduated? The payroll helps you break that down based on the percentages stipulated by the law.

  • Take into account matters such as prorated salaries, leave payments, bonuses/commissions, loans, expense refunds and the likes, that affect your payroll monthly. You don't want to have to start racking your brain every time someone breaks something and you have to deduct from their salary, or every time someone goes on leave and you have to add the leave allowance to their salary.

  • Help with manpower planning and budgeting. Your payroll tells you whether you can accommodate someone else on the payroll, or what it will cost the employer to increase an employee's salary.

  • Speed up the salary payment process, which saves time from having to compute your payroll manually. Trust me, a foolscap sheet and calculator won't help you at the end of the month. Get a payroll.

  • Promote transparency among staff, because you will be able to give an individual staff their salary breakdown at point of hiring and subsequently in their monthly payslips. Some employees don't even know where all those tiny deductions are going, so it'll be helpful if you have this information handy.

Drag to resize
Summarily speaking, a payroll ensures fairness, transparency and structure in how you pay your staff, thereby eliminating discrepancies and errors. Gone are the days of using a handheld calculator to manually calculate an employee's salary. These days, the payroll system is used to provide a seamless process to your payroll process and ensures it is done on time.

Need to learn how to come up with your own payroll? Then you will certainly find our Payroll course useful. For a token, you can learn how to create your own payroll Excel sheet from scratch, and also learn the laws and regulations that guide payroll computation. And if you feel like skipping all the boring bits, the course also comes with a template that you can use, complete with the formulas embedded. So all you need to do is put in your employees' names and salary figures, and you're good to go!

Created with