How To Set Up Payroll For Your New Business?
Payroll errors are much more common than many people realize. If you do not pay the employees correctly, it can lead to a variety of moral and legal issues. In addition, such anomalies might have a negative impact on staff morale and, as a result, on corporate efficiency. Professional payroll and HR services from accounting firms in Malaysia help companies to avoid such severe issues.
While it is crucial to ensure correct and timely salary payment, compliance with different rules and regulations is also a critical part of the payroll system. Non-compliance with these regulations can result in significant legal and financial ramifications.
To ensure that your employees are pleased and you comply with the law, you must have a thorough grasp of payroll and how to operate it efficiently. In this post, we will discuss the major steps involved in setting up a payroll system for a new business.
1. Get Familiar with Rules and Regulations
The most important thing about establishing an efficient payment system in your business is getting familiar with the applicable rules and regulations. It will help you in ensuring maximum compliance with the law. You can also get help from professional payroll and HR services to help you out in this procedure.
2. Define Payroll Policy
Multiple factors influence the net amount to be paid to the employees. At that point, the company’s different policies, like salary, leave and benefits, attendance, and so on, come into play.
Payroll policies must first be clearly established and authorized by management to ensure a fair and transparent system. In ideal conditions, the payroll policy should be defined during the Malaysia company registration process.
3. Gather Data
The payroll process needs communication with a variety of departments and individuals. The payroll inputs come from a single source or fewer teams in smaller companies. In a bigger business, however, the work of obtaining data may appear to be daunting, so the corporation might have to hire an accounting firm in Malaysia.
Once you’ve received the data, double-check it for accuracy, including adherence to corporate policy, authorization, and proper formats, among other things. You must also make certain that no current employees are overlooked and that no inactive employee data are included in the salary payment process.
4. Select Payroll Schedule
You may pick a schedule that works best for your business once you have all of the necessary tax and legal paperwork to set up payroll. Monthly, semimonthly, bi-monthly, and weekly are the four major timetables.
Before selecting which plan is ideal for your company, it’s critical to understand each one. Set up a calendar with paydays and make a note of the days when you’ll have to handle payroll so that your employees may get paid on that certain day.
Include key quarterly tax dates, holidays, and yearly tax filing deadlines on your calendar. Keep in mind that you’ll have to do this every year in the beginning. You should also decide on each employee’s preferred distribution method. Many companies, for example, provide employees with the option of choosing between a paper check and direct deposit.
If you outsource your accounting functions to an accounting firm in Malaysia, you will have more time and energy to focus on other aspects of the business, as professional accountants will be dealing with the financial management of your business.
5. Calculate Gross Pay
Now that you’ve established a payroll plan, you may begin processing your first payroll. To do so, multiply each employee’s gross compensation by their hourly rate, which equals the total number of hours worked in a pay period multiplied by their hourly rate.
To begin, figure out how many hours an employee worked in a given pay month, including overtime hours and pay for the overtime as per the law.
6. Maintain Records
It’s critical to maintain track of your transactions as you process payroll for tax and regulatory concerns. For example, you must have documents on hand in case an employee disputes payment or the tax authorities request documentation in the future.
Maintaining records, including year-to-date payment, is especially crucial if an employee disputes a paycheck, so you can resolve any difficulties that occur. These records might also be needed if you are going through the Malaysia company registration process again.
In a Nutshell
By following these important steps, you should have no issue in setting up a reliable and efficient payroll system in your new business. However, if you are still facing any issues in this process, you should contact professional payroll and HR services to get help from the professionals.
For more information, feel free to get in touch with us.
