By Phoebe Wong - Associate Director, HR Outsourcing, Links International Singapore
As specialists in payroll outsourcing in Singapore, we can tell you that processing payroll isn’t as easy as you may think.
There are a lot of things to consider and a lot of admin involved, the kind of admin that sometimes gets in the way of more important activities that will help to grow your business. This is where outsourcing your payroll is beneficial.
Identifying a system and selecting relevant modules
The first step when arranging payroll processing in Singapore is to identify a good, reliable system that can process the payroll. This is particularly important given the confidentiality of payroll figures.
Different modules are applicable for different industries. For example, in the manufacturing industry, employees have different work shifts and different shift patterns. Therefore, we recommend the company to choose all modules, i.e. time management, payroll, costing and leave.
- The time management system tracks when employees clock in and out of work. From here, the system can automatically pull information such as overtime (OT), lateness, shift allowances, meal allowances, transport allowances etc. into the monthly payroll processing.
- The leave system is also crucial, since it is linked to other modules and will update the payroll accordingly. For example, if someone is taking unpaid leave, the system will automatically deduct that day’s salary during payroll processing. Another example would be if someone is taking annual leave. Here, if the employee has filed for annual leave (for example, through Links HR Portal), the time management system will capture this and will therefore not show absence, so their salary will not be deducted.
- The costing module is important for the finance department of a company, as they can use this when they are doing cost forecasts and year-end cost for leave accrual and so on.
Configuring the modules
One thing to remember is that, before all these modules kick into automation mode, it is very important to make sure that they are correctly configured.
Firstly, employers must identify their employees’ residence status before starting the payroll processing. In order for foreigners to work in Singapore, they must have a valid work pass. As specialists in visa processing in Singapore, Links is able to apply for work passes on behalf of the company and its employees.
For employees who are Singapore citizens or permanent residents (PRs), employers will need to contribute their CPF to the CPF Board each month and at the same time they can submit the other funds to the CPF Board as well.
When processing payroll, the employer will also need to identify if their employee’s allowance or payment is taxable or non-taxable, as this will determine the tax figure that is submitted at the end of the year. Common allowances include OT, leave encashment, housing allowance, meal allowance, shift allowance, long-service award, expenses reimbursements and so on.
After the total figures have been calculated, most companies in Singapore will pay their employees’ salaries via bank transfer and thereafter issue an itemised pay slip once the payroll has been cleared.
There are, of course, sometimes ad hoc payments during the month as well, such as foreigner tax clearance, reservist submission, maternity/paternity/childcare submission, and so on.
Foreigner tax clearance is applicable when foreigners or permanent residents leave to go back to their own country permanently. As an employer, you will need to withhold their salary until the tax is cleared by the IRAS.
After the end of the calendar year, income tax will need to be filed to the IRAS, including the monthly income paid through payroll, as well as any other benefits in kind received indirectly from the company. The deadline for submission is by 1 March each year.
Outsourcing your payroll saves time and helps you focus
Having read all this, I think you will agree with me that processing payroll isn’t as easy as you may think! Outsource your payroll processing to Links International and we will handle all of the above details, so that you can focus more strategic activities that will help to grow your business.