Your payroll services form one of the cornerstones of your business. Ineffective payroll services can affect the business negatively on a whole lot of levels and, often, small businesses with a smaller cash flow and fewer employees struggle to deal with the demands that come with the payroll. Benefits and taxes must be calculated, annual or sick leave must be booked and a record must be kept, other deductions or additions have to be worked out, and money must be paid into the correct accounts.

Some of the ways in which an inconsistent or ineffective payroll system can affect your business include the following:


  • Staff morale: When payroll services are not effective, and employees get paid late or incorrectly, they become doubtful of the ability of the company and also the financial stability of the business. This makes them feel threatened and insecure about their income. An insecure employee may become less motivated and won’t perform as well as they are capable of. Productivity can decrease and the effectiveness (and ultimately the bottom line) of the company will be negatively impacted.


  • Time consuming: Payroll services are very time intensive because they have to be done correctly on a consistent and regular basis. In smaller businesses, the business owner or an admin assistant is often responsible for payroll services, which means that they spend a lot of time focusing on this instead of focusing on other matters that could benefit the company better, such as working on new product lines, doing marketing, and finding new clients. This is why a lot of companies choose to outsource their payroll services to an external agency.


  • Penalties: Because there are tax implications when it comes to payroll services, they have to be done accurately and tax has to be paid accordingly. If this is not done in the correct manner or within the time limits set by SARS, the company may incur hefty penalties that they can ill afford.


  • Legislation: Payroll is often affected by legislation and when new legislation is introduced or current legislation is altered, the business owner or the person who performs the payroll services has to be aware of these changes and apply them to the business. For people who are not payroll professionals it can be very difficult to keep up with new legislative requirements, and the company may default on certain requirements, leading to legal problems and penalties.


If you need some advice on payroll services or want help with the management of your payroll services, give our team of payroll professionals a call at CHA Group today.