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Understanding the Pros and Cons of Outsourcing Payroll In South Africa

All companies that employ people have one thing in common thus at the end of certain period they have to compensate their employees. This process on  its  on is a very sensitive task  considering different guidelines that have to be adhered to. All this being said at some point a business owner might be at a point where they have to choose a better option for their  payroll administration. The choices are either to do it inhouse or outsource. Lets take a look at some of the guidelines on which option to choose.

Payroll in South Africa

Like any country South Africa has a set of labor laws that guide how to manage employee remuneration. Every registered company  should comply with these failure might mean complications with authorities. All this means that when doing payroll due diligence has to be done hence payroll becomes a huge task that can take a good amount of time to do. These are some of the different laws that must be complied with  when a company is  doing  payroll.

  • Tax act
  • Basic conditions of employment act
  • Unemployment insurance act
  • Employment equity act
  • Compensation for occupational injuries and diseases act
Running an in house payroll system

Running an inhouse payroll system has its on advantages and disadvantages. Some of the advantages include obviously saving some money because you are doing it in house, instant access to payroll data and it keeps company data confidential.

On the contrary  it can be a very problematic task because some times it means the business owner has to divide their time properly so as to give payroll sufficient time. Moreover, it requires certain skills in order to produce a legally compliant payroll. The other thing is that some payroll software like sage might require a bit of technical know how.

Outsourcing payroll services

like running an inhouse payroll system outsourcing has its pros and  cons. Amongst the disadvantages are  sharing sensitive information with a third party and obviously you have to pay something for the services.

The advantages include the following

  1. No need to hire or train payroll employees
  2. It frees up time for you to focus on growing revenues and profits.
  3. Transparency and predictability of the costs and many other things.
Is outsourcing payroll a good idea?

Consideration has to be given to the following things, time, as a business owner do you have the time to invest into payroll as a task ,if not are you flexible enough to employ a payroll department. The other thing is do you have the expertise and know how on how to set up an efficient payroll system. If you fall shot of the later mentioned it probably means it can be a good idea to outsource payroll services.

How to choose a good payroll service provider

These are some of  the things to consider

  • What software are they using or are they using any moreover, does the software allow easy connection to Sars.
  • Reputation
  • Track record
  • Confidentiality
  • Pricing based on market prices
How we help businesses manage their payroll

At Hartley accounting we have a dedicated payroll department that consists of  certified payroll experts. We charge a good price if not one of the lowest in the market thus R45 per employee. Click button below to check our full payroll services page