Payroll process
Other than allowing your business to run smoothly, did you know that a streamlined payroll process can help you improve your cash flow? Labour costs take up about 70% of your total costs, which is why it having a smooth payroll will help in the long run.
If you are unaware of what you need for an efficient payroll, here are some tips that will help you keep the costs down and productivity high.
Singapore payroll process
Companies in Singapore have to be compliant with the regulations set up by the government regarding payroll management.
Wages must be paid at least once a month
All employees must be paid at least once a month. Payment should be made within 7 days after the salary period’s end date, else it will be considered an offence under Singapore law.
Wages include basic pay and allowance to your employee for work done under a contract of service. It does not include housing, food, travel allowance, pension or retrenchment benefits.
Issue payslip to all employees
The Employment Act in Singapore also requires all employees to issue either hardcopy or softcopy payslips to their employees. These payslips should be itemised, including details such as date of payment, basic salary, allowance, salary period, overtime salary and deductions made.
Pro-rate your employees’ annual leave and salary
Incomplete work months should be pro-rated per the contract. Your employee will only be eligible for the pro-rated portion of his wage for the part of the month that he has worked.
Calculate your employees’ overtime pay
Any work done outside normal working hours is considered overtime work. The standard rate of overtime work is at least 1.5 to 2 times the hourly basic rate of pay. Your employee can only work to a limit of 72 overtime hours a month and payment for overtime pay should be made within 14 days after the salary period’s end date.
Maintain employment records
Two years of employment and salary records for your employees need to be maintained for tax purposes. For ex-employees, their record should still be kept for a year after their departure.
Mandatory contributions, levies and statutory requirements
Employers in Singapore are required to adhere to several contributions, levies and statutory requirements. These include:
- Central Provident Fund (CPF) contributions for employees as well as National Servicemen. Though this is applicable for employees who undergo NS training periodically, employers are not required to pay them for the days that they are away;
- Skills Development Levy (SDL), which provides training grants for work-related training;
- Monthly levies for foreign workers with Work Permits
- Ethnic funds to help the less privileged in their respective ethnic communities
Comply with the statutory reporting requirement
If you have 10 or more employees under your employment and you have received a notice to file their employment income electronically, you will have to file their income to IRAS electronically by 1 March each year.
You are also required to seek tax clearance for your foreign employees by filing Form IR21 at least a month before your employment ends their employment with you, starts an overseas posting, or departs from Singapore for three months or more.
Document your payroll process procedure
Recording your payroll process makes it easier for you to analyse and audit it in the future. This will allow you to identify weak areas in the process. Once you have figured out a payroll process that works best for your company, ensure that everyone in your team understands it.
Be sure to also include a standard operating procedure for your payroll processing. This should include all the steps in payroll processing, including the reporting and check handling procedures.
Use automated workflows when possible
Not only is manual data entry tedious and time-consuming, but it also makes you prone to error. As much as possible, try to re-evaluate your workflow for how you handle bonuses, pay errors, missing pay, overtime and time-off requests.
You can do so by combining your employee scheduling software and timesheet software. This sort of integrated timesheet will automatically record time-off requests and overtime.
Set up a payroll calendar
A calendar helps your employees to know when they will receive their salary and allows payroll employees to plan and organise their tasks. These calendars can be easily found on the internet or created using an Excel spreadsheet.
Use a regular calendar as a guide for your payroll calendar, especially for certain periods in the year where you may need more time. You may also want to use different colours to differentiate dates and holidays.
To avoid confusion, be sure to display all fiscal year pay dates on the calendar.
Outsourcing payroll tasks
Juggling all these administrative tasks like payroll and business accounting can be tiresome. If you find that you’ve been spending too much energy on these tasks, outsource them! We will help you take care of your back-end administrative work, including all your payroll and tax-related tasks.
