Payroll has traditionally been rather simple—pay your employees the right amount of money on the right day of the week or month and issue accurate payslips. However, the Kenyan payroll environment is becoming more complex as income tax regulations change and government and tax authorities place employers under more scrutiny.
Failure to comply – whether through deliberate evasion, late payment of payroll taxes or underpayment as a result of a miscalculation – is emerging as a major business risk. If you make a mistake when calculating statutory deductions such as income tax, National Health Insurance Fund (NHIF), and National Social Security Fund (NSSF), you may be subject to stiff fines and penalties. Your business’s reputation may also suffer.
Given that the tax environment is changing faster than ever before, that it is becoming more complicated and that the risks of non-compliance are so high, more and more Kenyan businesses are rightly concluding that spreadsheets and other manual methods are no longer sufficient to meet their payroll needs. Instead, they are looking to automated solutions to keep records and do payroll calculations.
Benefits of automation
An automated solution—such as Sage One Payroll, launched in Kenya on 3 April—will take care of calculating the complex formulas for the various deductions, generating compliance reports, and keeping accurate records. Without automating it, most businesses will find it difficult to perform accurate calculations and file submissions on time. These solutions save hours of manual work for the person in your business responsible for payroll administration.
Automation also makes it simpler to keep track of annual changes to tax regulations that impact on payroll tax calculations and various changes in legislation, such as any outcomes of the pending New Income Tax Act that may affect the payroll. The software is constantly updated to align with the latest tax laws and tables, so you don’t need to update your spreadsheet formulas or learn to make new manual calculations every year. This also reduces the risk of human error.
As important as compliance is, it’s not the only reason to invest in an automated payroll solution. The ability to generate tax certificates, reports and electronic payslips with the click of a button is a major timesaver for your payroll team. Automation also ensures that your employees receive accurate, on-time payments and payslips, which helps keep your workforce happy.
Payroll fraud is one of the most common white-collar crimes in the business world; what's more, erroneous payments can cost your business. A robust payroll solution puts tight financial controls in place. It helps to reduce these risks by giving managers better visibility into transactions, providing an audit trail, and providing a set of controls, checks and balances that help to prevent errors and fraud. It closes many of the gaps where fraud and human error can sneak in.
Business builders and entrepreneurs don’t go into business to manage admin and red tape, which is where automation makes a difference. Our vision is to make tasks such as payroll administration invisible by 2020 so that you can focus on business strategy, workplace satisfaction, customer satisfaction and other areas of your business that give you a competitive edge.