Payroll Reconciliation in UAE

Payroll reconciliation in UAE sounds daunting, but it is yet another thing that’s on the plate of business owners. Several studies found the majority of business owners in the country spend at least three hours on payroll processing each month. Twenty-eight percent spend over five hours every month.

Review The Payroll Register

The payroll register of your business lists the details of every employee’s payroll for a pay period. The register should include all the basic information of an employee, such as the following:

  • Name
  • Birthdate
  • Employee number

In addition to the aforementioned, the payroll register of your company should also record payroll-related activities for every pay period. This includes:

  • Pay rate
  • Hours worked
  • Regular hours
  • Pay date
  • Overtime hours
  • Employee withholding
  • Any other deduction
  • Net pay
  • Gross pay

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You will need to begin the process of payroll reconciliation in UAE by making sure that all the information about employees is accurate. For instance, has an employee changed his/her number of allowances recently? Any change must be updated in the payroll register. Also, new employees are to be added to the payroll register as well.

In addition, double-check the match by confirming the gross pay of employees on the payroll register. The gross pay should be equal to the pay rate of an employee multiplied by the number of hours put in by the person.

Confirm The Time Cards of Employees

When you are reconciling the payroll of your business for a pay period, you will need to check the timesheets or time cards of employees for a specific period. Review the hours that are entered as they must be correct. Confirm the hours on timesheets as they should match what is in the payroll register. Keep in mind you will also have to take the following into account:

  • Unpaid time off
  • Paid time off
  • Sick days
  • Vacation time
  • Overtime
  • Holidays

 All of them will have an effect on the paycheck of an employee for a pay period. Take note that this step would be less tedious if you outsource payroll in UAE.

Check The Pay Rates

Now that you know the hours that you need to compensate for a staff member during a payroll period, it is time for you to find out the equation’s other half. You can do so by figuring out the pay rate that you should multiply by the number of hours worked.

Turn your focus on the pay rates that are printed in the payroll register. Do you have the current numbers? For instance, maybe an employee of yours recently received a salary raise. The pay rate has to be up-to-date on the payroll register. Perhaps the overtime rate has been changed. This should also be reflected in the register.

This step is crucial as you will use the pay rates in determining the gross wages of your employees. If the pay rate is not correct, then the entire payroll is going to be off.

Confirm The Deductions

You know that your business can’t just multiply hours worked for a pay period with the pay rate and then cut a check to an employee for that amount. You’d have to make sure that you are withholding the right amount from employees’ paychecks. At a minimum, you will need to be withholding the following from the paycheck of an employee:

  • Health insurance
  • Workmen compensation insurance
  • Wage garnishments, if applicable

Again, this needs to be updated in the payroll register. If you have any doubts regarding any information’s accuracy, you should check with the employee and the relevant parties to confirm the withholding amounts. Every single deduction has to be reported individually. The deductions shouldn’t be in a lump sum amount. This will not just help during the double-checking, it will also prove to be crucial when you’re to explain why there are deductions.

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Record in The General Ledger

Whenever you are processing payroll, you’ll also have to record the information in the general ledger of the business. Your business might be called the general ledger as books. It is where you are keeping the records of your company’s financial data. All financial transactions are recorded in the general ledger. Transactions are typically split into the following categories:

  • Expenses
  • Revenues
  • Owner(s) Equity
  • Liability
  • Assets

You will record the total wages that are paid to employees as a debit. Deductions will be recorded as a credit. It’s another process that is a lot more streamlined and straightforward if you have outsourced experts handling your accounts for you. Payroll outsourcing in UAE takes out a lot of manual effort and minimizes errors in your books.

If you want to know more about payroll reconciliation in UAE, call us here in Payroll Middle East today!