The barrier between human resources departments (HR) and payroll administration has disappeared in small and medium enterprises (SMEs), thanks to new developments in payroll software that cater for changing demands.
Stephen Corrigan, MD of Softline Pastel Payroll, says new legislation and more expansive requirements from the South African Revenue Service (Sars), have led to payroll administration taking on data capture and complex reporting functions that were previously the domain of HR.
Features and functionality that simplify the process of legislative compliance have already been incorporated into payroll packages and this has alleviated much of the burden that used to be the responsibility of HR.
Typical of this burden is the statutory reporting on equity and skills development, which has become a payroll responsibility.
Payroll administrators have essentially become tax experts and have to fundamentally understand the five basic Acts that govern employment.
“They are also having to delve into the traditional HR world of statistical analysis and reporting. There is simply no exclusive HR-focus any more,” Corrigan says.
In response, more companies are automating their payroll processes and, SME companies in particular, are making a leap from having no payroll system, to full automation through payroll software.
At the moment, Sars is offering a no-questions-asked amnesty to small businesses with an annual turnover of less than R10-million.
This amnesty applies to all VAT, employees’ tax (PAYE), skills development levies (SDL) and unemployment insurance fund (UIF) payments due up to the end of February 2006.
Corrigan adds that these businesses can also get amnesty on company taxes — including tax on profits and secondary tax on dividends — up to the beginning of the 2006 tax year.
He says this is an opportunity for companies to become Sars-compliant and to ensure that they remain compliant in the future by automating their payroll with payroll software.
The payroll outsourcing environment is noting a similar trend as the lines between HR and payroll blur.
Marina Nolte, national outsourcing manager at Softline VIP, says many companies are now opting to outsource the hard human resources functions along with the payroll.
“They want us to keep track of areas such as employment equity, skills development levies, the training courses staff members attend, and leave administration.
“The latter area is often seen as a human resources function, but it should be considered as a part of payroll as it carries a rand value and we need to calculate leave provisions,” Nolte says.
Gary Epstein, MD of QuickBooks, says payroll software is becoming a necessity.
“Businesses have to take payroll a lot more seriously than they did in the past, as Sars has become much more professional. This means companies have to follow suit.
“If a company does not track all aspects of its financial affairs, it will be left behind, Sars will not receive the information it requires, and employees will not know where they stand,” Epstein says.
He says payroll software also assists in terms of human resource issues such as skills development and employment equity.
“To every business, time is money. Using a spread-sheet or a manual system is becoming too costly.
“Moreover, by using a manual system, you are leaving yourself open to errors,” says Epstein.