As a business owner, you may be well aware regarding the responsibilities you have related to payroll, complying with local employment regulations, and paying your employees. With that in mind, there is a need to set up a payroll system. There are four options for business owners when it comes to a payroll system and they are the following:
- Doing payroll by hand – payroll that is done by hand can be possible, but it can be inefficient and time-consuming, especially with a business with a number of employees.
- Utilizing a payroll software – using a software for payroll processing allows for better management of paying employees, provided that the software is running properly.
- Hiring an accountant – with hiring an accountant, the main benefit is the fact that the accountant is familiar with all the responsibilities related to payroll processing in UAE. However, this can be costly, as the accountant may require an entire department to assist with the management of payroll.
- Outsourcing payroll processing to experts – payroll outsourcing in UAE can alleviate the workload of businesses without having to acquire equipment and hire new staff to complete payroll processing. However, there is a need to make sure the outsourced firm hired by a business is reputable and established to ensure proper processing.
Regardless of the system that you choose to settle on, there is a need to have the following set up:
- The option for employees to either get their compensation through direct deposit or cheque;
- The reporting of withholdings and earnings of every single employee, as well as the total withholding amounts sent to the right agencies or authorities
If you choose to do payroll processing on your own, here is what you need in getting started with the task:
Find out The Differences Between an Independent Contractor and Employee
There can be huge differences as to how you pay independent contractors or freelancers and employees. Knowing how the two kinds of employees will have an impact on your payroll is crucial for a business owner to understand. You may already know how different the pay structures of your employees. If so, take note of that.
Also Read: Types of Payroll Solutions for Businesses in UAE
Settle on The Pay Period
In the United Arab Emirates, pay periods are commonly by the end of every month, weekly, biweekly, and semi-monthly which is twice in one month: on the 15th and 1st of every month. Since payroll specialists run the monthly reports, they’re often happier with semi-monthly periods as they calculate twenty four times throughout one year. The benefits are also every month, so a semi-monthly as the pay period will make the deductions easier to manage.
As for biweekly pay periods, they are preferred by employees that are paid by the hour as well as those who work overtime. They can be simply calculated as well. Since semi-monthly pay employees that work by the hour at 86.67 hrs with every pay period, calculation for overtime may be complicated especially when compare to monthly and semi-monthly calculations.
Weekly pay periods would be the ones that are most favored by trade industries, including contraction. Some businesses tend to avoid pay periods that are weekly as they can be expensive and service providers that offer payroll services in UAE charge with every payroll process as it is certainly time-consuming.
Besides finding the most appropriate pay period for your business and employees, you should also consider the regulations regarding pay periods in the area in UAE that you are operating in.
Also Read: What is Payroll Processing Services?
Document Employee Compensation
Precise payroll records would be a necessity with businesses. It is, therefore, essential to have a system set up in place which can accurately track employee compensation, business deductibles, how the business is handling paid time off, and employee hours. If you are not sure as to where to start, then this is the best time to consult with specialists on payroll outsourcing in UAE.
Also Read: Payroll Accounting: Everything You Need to Know
There are regulations that require businesses in the UAE to keep records for a specific amount of time. To give you an example, employee information has to be kept for at least six years even when they leave the organization. Certain records also have to be kept and stored properly and they include designation of the employee, employee name, address, and contact number among others.
Dealing with numbers is already hard enough for most of us. Dealing with numbers and employees at the same time can prove to be a bigger headache as a business grows. If you want to make sure you handle payroll processing properly, talk to us. Our experts will be able to advise you on payroll processing based on your specific needs and requests. Call us today to book an initial consultation with our experts on payroll processing in UAE.