Best Payroll Outsourcing Companies in the Philippines

One way to ensure your business is up and running is by taking care of your employees regardless if it’s a one-person show. They’re the lifeline of your business. Your employees have their reasons for working, one of which is to earn. How? If you had a salary, payroll, or accounting in mind, you got that right!

Aside from feedback, continuous personal, and career development, employees look forward to their pay. However, payroll and accounting mistakes do happen because of miscalculation of work hours, or HR forgetting to share updates on revised pay structures, to name a few.

For most employees, their daily 8-5 jobs are their only source of income, and missing their pay can take its toll on them.

Can you avoid payroll and accounting mistakes? You sure can by understanding what a payroll software is, knowing how to run it effectively, and learning what laws and regulations are related to it as well.

Consequently, the accounting process helps businesses with reports, analysis, and delivers a summary of financial transactions that cover a specified period to show its financial position and cash flow.

What is a Payroll System?

If your business has one or more employees, a payroll system can help you with a list of everyone who works for you, and the amount that each should receive. Yes, you read that right. Even a small business could benefit from having a payroll system in place and should be compliant with taxes and other legal requirements. It should have the following:

cloud base payroll system

All these details are needed to ensure that your employees get what they work hard for and what they deserve.

What are your thoughts on what we just covered? We’re just getting started.

Payroll 101: How Payroll Works

At the heart of every payroll is genuine appreciation for your employees for the value they provide your business. A good payroll system works wonders when companies use it as an employee retention strategy. In addition to this, it also results in better performance, stronger morale, and better self-esteem. Ultimately, employees stay with you and not think of transferring to your competition.

4 Technical Aspects of How Payroll Works

1. Paying your employees.

  • Create a compensation package
    We’re not just talking about regular wages. To encourage better performance, companies often map out performance incentives. Offering pre-tax benefits is a great way to do this. Not only does it save employees from paying additional taxes, it also boosts retention. In short, competitive salaries attract and retain talented people.
  • Select a method of payment
    A seamless way to pay your employees is through a bank transfer or what’s known as a direct deposit. This way, your employees don’t have to fill the long lines to receive their wages, wait for their check to clear, or travel to access their funds.
  • Schedule payments
    Most companies pay their employees every 15th and 30th of the month. Other companies select different dates. But what’s important is that employees get their salary on time.

2. Withholding and Paying Taxes

  • Employee Taxes
    Employees get a deduction from their gross pay, resulting in lower net pay.
  • Employer Taxes
    The employer’s payments don’t just include their employees’ payroll taxes. It involves other types of taxes, such as sales tax, withholding tax, corporate income tax, and local business tax.

3. Tax reporting

Companies operating in the Philippines must report taxes to the Bureau of Internal Revenue and must include details such as the company name, registered address, names of employees, monthly employee and employer share, and payroll withholding tax.

4. Compliance with labor laws

This covers several regulations, some of which cover standard qualifications for knowledge and skills, training, conditions of employment, wages, and occupational safety and health standards.

What Can A Payroll System Do?

A lot of the payroll tasks can admittedly be time-consuming and can lead to errors. Below are some of the tasks that a payroll system can do for you.

4 Benefits of a Payroll System

Now that we’ve established the tasks that this system can do for you, let’s go over the benefits of having one.

  1. Cost Efficiency
    It’s is a good business strategy that’s employed by most companies. Why? A businesses’ main goal is to complete as many tasks within a specified time.
  2. Saves Time
    Having an automated system in place reduces manual work on payroll tasks, and helps enhance efficiency.
  3. Eliminates Errors
    Automation gets rid many errors like miscalculations that come with manually fulfilling payroll tasks.
  4. Provides Security
    Ensures your payroll data is secure, prevents malicious cyber-attacks, and unauthorized access.

How to Choose a Payroll System

With several payroll software in the market, it could be challenging to select what works best for your business; hence, there are several things you would have to consider to help with your selection.

Employee Population

Payroll software don’t all have the same features. Some are created for small businesses and others for medium to large-scale businesses. It’s best to get one that meets all your business needs. Consequently, you should consider the possibility of business growth, and whether the software still works by then, or else you’ll end up having to purchase new software every time there is growth in your company.

Costs

Getting the price of the software itself isn’t difficult. You can easily get it from prospective vendors. However, there are other costs that may come with it, such as the cost of training your staff to use it, the cost of implementing its use, maintenance, upgrades, and technical support. You can ask your prospective vendors what payroll services come with the package.

Taxes

Tracking and managing taxes can be tricky for a business. You’ll have to determine whether you are okay with having your payroll software do the work for you or if you’d rather delegate that task to a third-party that offers taxation services.

Unique Needs

Lastly, some businesses may have unique pay features. Find out if those can be covered by the payroll software.

With these in mind, choosing the right payroll software will no longer be too daunting.

Most Important Factors to Consider When Choosing a Payroll Provider

It isn’t just about searching for the right software that’s challenging. Looking for the right provider is even more crucial. There are several providers out there with pros and cons to their payroll services. So how do you choose the right one?

Let me share the important things you should consider.

1. Ease of Use

Everyone is bound to struggle with something new hence, the navigation and use of a software shouldn’t be too difficult to learn.

Most software providers offer online demos you can experience on your own, or have a representative contact you to set a quick online demo session. Either way, the goal is for you to get the feel of using the software.

Determine what features you should have versus ones that are good to have. Here are other things you need to watch out for:

  • User-friendly interface – are icons and information components working as they should, and can anyone learn to use it?
  • Layout and color scheme – are they easy on the eyes?
  • Access to information – is it easy to find?
  • Mobility – is accessibility across different devices possible?
  • Integration – will it work with other systems?

2. Access to Self-help and Technical Support

Payroll processing must be done conscientiously. Therefore, the software language should be easy to understand by all users, whether they’re accountants or not. Industry-specific terms are called jargon, and often, it’s jargon that delays output or leads to errors.

You should not have to feel overwhelmed and helpless at the last minute and hire someone to do the work for you. It’s unnecessary and not cost-efficient.

Ask yourself:

  • Can you access the self-help feature, or can you get real-time support via a chat function?
  • When you access the software’s knowledge base – are the instructions, explanations, and troubleshooting

3. Opportunities for Business Growth

Future expansions are always a good idea. Forward-looking endeavors mean that part of your plan is to see what your payroll needs could be two to three years from now. Can your software accommodate those? Additional payroll needs could cover more benefits, or an improved incentive scheme. Consequently, it’s cost-efficient because you don’t have to purchase additional features or a new software.

4. Costs

Believe it or not, though costs are essential, it isn’t the main determining factor when choosing a payroll provider. A common misconception is that most look for the cheapest product. Why get something that’s cheap but gives you problems down the line, as opposed to getting something more expensive but is easy to use. The same thing applies to the after-sales support you can get. Think about it. No one wants to go outside a planned budget.

Ask the following:

  • What’s the start-up cost? Does it include a setup and training fee?
  • Do you need to pay a minimum amount?
  • Are you going to be billed monthly, quarterly, or annually?
  • Are there costs to adding features, employees, users?

Do remember these four factors when choosing a payroll provider. Use it to guide you so your search won’t be too challenging.

Top Payroll Services in the Philippines

1. Payroll2U

payroll2u malaysia payroll outsourcing packages
This company can do anything related to payroll and technology for countries in Asia. They also have other offices in locations like HongKong, China, Thailand, Malaysia, and Vietnam, to name a few.

Payroll software, implementation, payroll processing, payroll audits, calculations, reimbursements, and leave calculations are just some of the payroll services they can do for you.

Headquarters: 6 Temasek Boulevard, #22-03 Suntec Tower 4, Singapore,
038986, SG
Office: 2/F GPI Bldg., 53 Bayani Road, Fort Bonifacio, Taguig City 1630, Philippines
Phone: +63 2 8423 2157
Email Address: sales@payroll2u.com
Website: www.payroll2u.com
Available in: Google Play and App Store

2. P&A Grant Thornton

Punongbayan Araullo Grant Thornton
Founded in 1988 by two respected leaders in the accounting industry, Benjamin R. Punongbayan and Jose G. Araullo. P&A teamed up with Grant Thornton International in 2003, one of the world’s leaders in accounting and business consultation, and they have not looked back.

They cater to diverse industries such as travel and tourism, technology, real estate and construction, the public sector, financial services, energy and natural resources, and consumer products. Moreover, they operate in 135 countries around the globe, servicing countries in Africa, South America, the United States, Asia Pacific, Europe, and the Middle East.

Their strength in the accounting industry allows them to help both public and private clients, offering their technical knowledge and skills with audit and assurance, taxes, and business processing solutions. Moreover, they offer insights that lead to their clients’ business growth.

Head Office: 19th & 20th Floor, Tower 1 The Enterprise Center, 6766 Ayala Avenue, 1200 Makati City
Philippines
Phone: +632 8988 2288
Email Address: business.development@ph.gt.com
Website: www.grantthornton.com.ph
Available in: Google Play and App Store

3. Gusto

gusto payroll
Established in 2012, it has helped over 100,000 small businesses with payroll services, administering retirement plans, and health insurance.

They help businesses with payroll, employee retirement, health, and savings plans, time tracking capabilities, and HR needs. Gusto also offers packages that help accountants and bookkeepers be successful at what they do.

Main Offices:
525 20th Street, San Francisco, CA 94107
1201 16th St, Denver, CO 80202
Sales Phone: (877) 270-5345
Website: gusto.com

4. Dashpayroll

dashpayroll payroll system philippines
There is little information out there about how this company started other than that it’s Philippine-based and offers payroll software with integrated features such as the inclusion of biometric data and mandated deductions that are automatically computed.

We also do not have multiple feedback from users of the software except from a couple of individuals who attest that the software helps automate manual tasks and you’re able to generate reports any time you need them. Perhaps we can get more feedback about them in the future.
Prices: dashpayroll.com/pricing
Office: 20th Floor West Tower, Philippine Stock Exchange Centre,Exchange Road, Ortigas Center, Pasig City, Philippines 1605
Phone: 687-6649 loc 113, 09223382940 / 09975362264
Email Address: inquiry@dashpayroll.com
Website: dashpayroll.com

5. JeonSoft Corporation

jeonsoft payroll software philippines
Founded in 1999 by two software developers, earning profitable salaries. They took a risk, left their jobs and set it up. Their first clients were referrals from friends who they offered low-priced packages to compared with other companies in the same industry.

In 2002, they hired more people to join their team and created more software to cater to accounting, loans, recruitment, employee self-service, and payroll needs for businesses of all sizes.

Products: JeonSoft Payroll Suite, JeonSoft Web Recruitment, Payroll.PH, Employee Self-Service, Bundy.PH, Web.HR, Work from home auditor, Biometric Devices, Payroll Outsourcing Service, JeonSoft Business Suite, JeonSoft Loan Management System, JeonSoft Inventory System, JeonSoft Accounting System, JeonSoft Custom Software.

Head Office: 37th Flr. LKG Tower, 6801, Ayala Avenue, Makati City, 1226, PH
Phone: (+632) 937-1559 | 370-7008 | 938-7788 | 949-0920
Email Address: info@jeonsoft.com
Website: www.jeonsoft.com

6. Payrollpinas

online payslip payroll pilipinas
It was founded in 1999 by two software developers who were earning profitable salaries. They decided to take a risk, leaving their jobs to set up the company.

Their first clients were referrals from friends to whom they offered low-priced online payroll processing packages compared to companies in the same industry.

In 2002, they hired more people to join their team and created more software to cater to accounting, loans, recruitment, employee self-service, and payroll needs for businesses of all sizes.

It’s also the flag bearer product of RVE App Maker Incorporated, the country’s top provider of business solutions.

Office: 1807 Philippine Stock Exchange Ortigas Center, Pasig 1605
Phone: (Sales) +632 8994.33.62, +632 8400.89.18. (Support) +632 655.37.63
Website: payrollpinas.com
online.payrollpinas.com/emppay/_loginemp.php

7. ADP Philippines

adp philippines payroll
The company was established 1949 by two brothers, Henry and Joe Taub. It was first known as Automatic Payrolls, Inc. The company changed its name in 1961 to Automatic Data Processing, ADP. It is also a publicly-traded company on the NASDAQ.

With over 70 years of experience, they’ve received multiple awards for their services and for being a leader in the industry.

They have offices in countries located in North and South America, Asia Pacific, Africa, the Middle East, and Europe. Consequently, they cater to small, medium, and large-scale companies. Their services cover but are not limited to payroll, time and attendance, benefits and insurance, HR needs, and integrations.

Headquarters: 1 ADP Blvd, Roseland, NJ 07068, United States
Office: 6F Glorietta 2 Corporate Center, West St, Ayala Center, Makati, Metro Manila
Phone: +63 2 558 1237
Email Address: contact-philippines@adp.com
Website: www.adp.ph
Available in: Google Play and App Store

8. PayrollHero

payroll hero
Founded in 2011, this company offers services for payroll, such as allowances, benefits, bank enrollments, government remittances. Subsequently, they also care for schedule management and HR information.

Office: Fort Bonifacio, Taguig Metro Manila 1201, PH
Email Address: support@payrollhero.com
Website: payrollhero.ph

9. Sprout Solutions

sprout solutions philippines
It’s a computer software company established in 2015 and offers services that take away the pain from payroll and HR needs of small start-up, medium, and large-scale companies based in the Philippines. Their focus is on back-end solutions.

Head Office: 11F Cyber Sigma Building, Lawton Avenue, McKinley West, Fort Bonifacio, Taguig
Phone: +63-02-3485-8338
Email Address: info@sprout.ph
Website: sprout.ph
Available in: Google Play and App Store

10. Salarium

salarium payroll software
Judah Z Hirsch founded Salarium in 2013. It provides time management, payroll, and disbursement services to companies in South East Asia and other countries around the world. They also provide finance and government reports plus their very own cash card that helps employees avoid the hassle of setting up their bank accounts.

Headquarters: 6 Balmoral Crescent, Singapore, Singapore 259896, SG
Office: 1650 Peñafrancia St., Santiago Village, Bgy. Valenzuela, Makati City 1208, Philippines
Phone: +63 (2) 8271-1523
Email Addresses: (General Inquiries) info@salarium.com,
(sales) sales@salarium.com
Website:www.salarium.com
Available in: Google Play and App Store

11. JustPayroll

justpayroll best payroll system philippines
It was founded in 2013 by David Bell. Whether you use their software or prefer to outsource, the company offers quick and guaranteed services such as streamlined time and attendance capabilities, and payroll solutions that are compliant with government regulations.

A Cloud based ‘Software as a Service’ ensures continuous updates and always compliant results. No need to worry about changes in Government policy; all changes and amendments are automatically rolled out on the required dates as per Government mandate.

Office: 5th floor, Exchange Corner Bldg., V. A. Rufino St. cor. Bolaños Sts. Legaspi Village, Makati City, Metro Manila 1229, PH
Phone: +63 (2) 491 7391
Email Address: sales@justpayroll.ph
Website: justpayroll.ph

12. MTL Cebu Business Outsourcing Solutions

cebu business outsourcin solutions accounting and taxation
Provide bookkeeping & Full Accounting services for companies operating in the Philippines. CBOS business model is designed & proven to work & with an exclusive staff working remotely for you, using cloud technology.

Payroll computation just made easy using our latest payroll solution which automates biometric attendance and payroll computation. Best Outsourced Payroll Service in the Philippines.

Office: 3rd Floor Unit 3A Core 1, CAIAA Center Vibo Place N. Escario St. Cebu City
Phone: (032) 416 – 1296
Email: info@cbos.com.ph
Website: www.cbos.com.ph

13. Payruler

payruler kai tomboc
It was founded by a father-daughter tandem, Jojo and Timmy De Jesus in 2015. They pride themselves in being able to ask clients what their pain points for payroll are, and then they customize features to fit their needs. As opposed to public misconceptions about customization of products and services that are expensive, they’re able to offer those at affordable prices.

Office: Room 332, Left Wing Arts and Sciences Building, University of the Philippines Cebu, Gorordo Street, Cebu City 6000
Website: www.payruler.com

10 Trends that will Shape the Future of How Payroll is Managed

Every business should come up with an employee retention strategy by improving its employee benefits and payroll features. With this said, here are some trends we’re seeing. Some may already have payroll systems that have integrated these features. For those who haven’t yet, here’s what’s in store for you.

1. Payroll will be GDPR compliant

In the second quarter of 2019, the General Data Protection Regulation was implemented to govern and protect users’ personal information. Why?

We are interconnected with everything and everyone. A gazillion pieces of information are shared and accessed in an instant. There are quick and ready solutions for almost everything, solutions that come with a click, a swipe, or a touch ID.

Less waiting time and the rush to do something else results in users not going over the fine print, unknowingly allowing companies to access private information. With guidance, it would be easy to determine what information should be shared and what should be kept private. Hence, the need for the seamless integration of this feature.

2. Payroll will be Audit-ready

Businesses concern themselves with daily operations involving clients and employees. So the task of going through a financial audit could be particularly stressful. This saves them additional time spent on balancing transactions.

3. Flexible Payroll Systems

A more flexible payment plan will allow access to funds at any time. This could be ideal for emergencies or short-term projects.

4. Gig Workers will be Part of Payroll

Today, thousands of freelancers around the globe companies to fulfill specific tasks.

5. Instant Payment Options

More companies are thinking of ways for employees to access funds through the integration of instant payment applications.

6. The Use of Bots

Customer service and self-help capabilities aren’t always possible. Through artificial intelligence and machine learning, bots are programmed to respond to simple queries and problems. Thus, employees have no need to go from one department to another to get answers.

7. Manual Payroll will Become Obsolete

Automation removes many of the time-consuming payroll tasks, enhancing efficiency, improving cost-effectiveness and employee satisfaction.

8. Employees with No Bank Accounts will be Part of Payroll

A part of the working population do not have bank accounts. Therefore, they receive their payments through cash, checks, or cash cards. This feature would help employees get the funds they’ve earned.

9. Financial Wellness Education

Companies advocate the benefits of salary allocation without the constant need for changes in the pay structure.

10. Pay Transparency

By sharing pay information, companies will be pushed into complying with the rules of fair pay.

Most Asked Question About Payroll Systems and more..

Payroll needs can be time-consuming and can be overwhelming, especially if you have a lot of questions about it. Rather than getting your answers via different channels, here’s a list of possible questions and answers.

1. How to Generate a 1604-CF Alpha List

Let’s breakdown what’s needed to generate the list first.

  • BIR Form 1604-CF is to report your (Annual Information Return of Income Tax Withheld on Compensation and Final Withholding Taxes)
  • BIR alphabetical list or alpha list is a list of is a file that’s attached to your BIR form 1604-CF and contains the following information:
    • Names of employees
    • TINs
    • gross salary paid by their previous and present employers
    • all tax deductions
    • tax refunds
    • taxes payable for the calendar year

    2. How to compute your alpha list of employees

    To organize information regarding alpha lists, let’s break them down into three types.

    • Employees as of December 31 who had no previous employers for the current year
    • Employees as of December 31 with previous employer/s for the current year
    • A list employees terminated before December 31

    Other forms that are needed for you to populate the alpha list:

    • BIR Form 1601 – Employee’s withheld taxes withheld per month
    • BIR Form 2316 – Employee’s withheld taxes from the previous employer

    When using a payroll software, ensure that it can generate the information indicated above.

    3. How To Compute Annualized Withholding Tax

    Employees as of December 31 who had no previous employers for the current year

    Joseph, is married with 2 qualified dependent children. He’s worked in one company for the entire year. Below are details for him.
    Sample Details:

    • Basic Montly Salary: (₱50,000.00 x 12 months) ₱600,000.00
    • SSS/Philhealth for the year: ₱8,400.00
    • Overtime pay for the year: ₱7,500.00
    • 13th month pay for the year: ₱50,000.00
    • Other benefits for the year: ₱10,000.00
    • Tax withheld (Jan – Dec): ₱150,000.00

    How to Compute:

    • Total gross compensation: ₱667,500.00 (Basic pay + Overtime + 13th month pay + other benefits)
    • Less: SSS/Pag-Ibig/Philhealth: ₱8,400.00
    • Less: Non Taxable Allowance: ₱30,000.00
    • Total Taxable Compensation: ₱629,100.00
    • Less personal exemption: ₱50,000.00
    • Additional exemption: ₱50,000.00
    • Net Taxable Compensation: ₱529,100.00

    Tax due then is:

    • The first ₱500,000.00 tax is: ₱125,000.00 + 32% of excess over ₱500,000.00 (₱529,100.00-₱500,000.00 = ₱29,100.00) x 32%: ₱9,312.00
    • ₱125,000.00 + ₱9,312.00
    • Total tax due is: ₱134,312.00
    • Less: Tax withheld (Jan-Dec): ₱150,000.00
    • Tax Refund: ₱15,688.00

    Tax payable: total tax due is > total tax withheld for the year
    Tax refund: total tax due is < total tax withheld for the year
    Break even: if total tax due = to total tax withheld for the year

    Employees as of December 31 with previous employer/s for the current year

    Albert, a single employee worked in the first company from January to June. He then resigned and worked in another company from July 2019.
    Sample Details for Company 1 (Jan – June):

    • Basic Monthly salary: (₱17,000.00 x 6 months) = ₱102,000.00
    • SSS/Philhealth: ₱3,600.00
    • Overtime pay: ₱7,000.00
    • 13th month pay: ₱8,500.00
    • Other benefits: ₱10,000.00
    • Tax withheld: ₱10,200.00

    Sample Details for Company 2 (July – Dec):

    • Basic Monthly Salary: (₱20,000.00 x 6 months) ₱120,000.00
    • SSS/Philhealth: ₱4,500.00
    • Overtime Pay: ₱15,000.00
    • 13th month pay: ₱10,000.00
    • Other benefits: ₱12,000.00
      Tax withheld: ₱12,000.00

    How to Compute for company 1 & 2:

    • Total gross compensation: (Basic + overtime + 13th month + other benefits: ₱222,000 + ₱22,000 + ₱22,000.00) ₱266,000.00
    • Less: SSS/Philhealth/Pag-Ibig: (₱3,600.00 + ₱4,500) ₱8,100
    • Less: Non tax allowance:
      (₱10,000.00 + ₱15,000.00) ₱25,000.00
    • Total taxable compensation: ₱232,900.00
    • Less personal exemption: ₱50,000.00
    • Net taxable compensation: ₱182,000.00

    Tax due then is:

    • For the first ₱140,000.00 tax is: ₱22,500.00 + 25% of excess over ₱250,000.00
      (₱182,000.00 – ₱140,000.00 = ₱42,000.00) X 25%: ₱10,500.00
    • ₱22,500.00 + ₱10,500.00
    • Total tax due is: ₱33,000.00
    • Less: Tax withheld from company 1 & 2 (₱10,200.00 + ₱12,000.00) ₱22,200.00
    • Tax payable: ₱10,800.00

    Tax payable: total tax due is > total tax withheld for the year
    Tax refund: total tax due is < total tax withheld for the year
    Break-even: if total tax due = to total tax withheld for the year

    Employees terminated before December 31

    John, married with 1 qualified dependent, filed a resignation effective July 31, 2019.
    Sample details:

    • Basic Monthly Salary: (₱50,000.00 x 7 months) ₱350,000.00
    • SSS/Philhealth for the year: ₱8,400.00
    • Overtime pay for the year: ₱7,500.00
    • 13th month pay for the year: ₱29,167.00
    • Other benefits for the year: ₱10,000.00
    • Tax withheld (Jan – July): ₱35,000.00

    How to Compute:

    • Total gross compensation: ₱396,667.00(Basic + overtime + 13th month + other benefits:
    • Less: SSS/Philhealth/Pag-Ibig: ₱8,400.00
    • Less: Non tax allowance: ₱30,000.00
    • Total taxable compensation: ₱358,257.00
    • Less personal exemption: ₱50,000.00
    • Net taxable compensation: ₱308,267.00

    Tax due then is:

    • For the first ₱250,000.00 tax is: ₱50,000.00 + 30% of excess over ₱250,000.00
      (₱308,267.00 – ₱250,000.00 = ₱58,267.00) x 25% ₱14,566.75
    • ₱50,000.00 + ₱14,566.75
    • Total tax due is: ₱64,566.75
    • Less: Tax withheld: ₱35,000.00
    • Tax payable is: ₱29,566.75

    Tax payable: total tax due is > total tax withheld for the year
    Tax refund: total tax due is < total tax withheld for the year
    Break-even: if total tax due = to total tax withheld for the year

    4. How Do You Set Up Payroll?

    Setting up a business is fulfilling as much as it is challenging. The next step is setting up your payroll. It’s good to ensure that it’s compliant with the Bureau of Internal Revenue’s (BIRs) regulations.

    Below is a list of items you need:

    • Employer’s TIN

    Employers or companies have their own tax identification number (TIN) because they just don’t pay income taxes. There are other kinds of taxes that they pay.

    • Get a license with the local government

    Businesses may be required to pay two kinds of taxes. The first is the income tax paid to the BIR. The second would be the taxes paid to the local government where the business operates.

    • Compile employee information for tax purposes

    As a business, you’re responsible for filing reports and paying taxes for your employees. To do that, you need to gather information about them. Here’s what you need:

    • Full name
    • Employment start date or employment termination date
    • TIN
    • Date of birth
    • Current address
    • Salary details
    • Classify your employees
      • Contractor
      • Part-time
      • Full-time
    • Choose a pay schedule

    The best part of being employed is getting your pay. Most companies schedule payouts every 15th and 30th of the month. However, you do have the prerogative to decide on your payout dates.

    • Choose a payroll system

    Be sure to select one that will be sufficient for your needs, that it will include all the details necessary for salary and tax payment, and to accommodate future expansion.

    5. How much should I pay for payroll services?

    On average, you could be spending ₱750.00 – ₱4,000.00 depending on the service you need. So give or take, you could spend a little less or more than this. Below are some of the services you may be needing:

    • Issuance of checks
    • Tax filing
    • Tax reports
    • Bank deposits
    • Calculation of taxes

6. What’s the difference between net pay and gross pay?

Gross pay is defined as the amount of money an employee receives before any deductions are taken. On the other hand, the net pay is the amount of money your employee receives after deductions have been taken.

7. What is capital gains tax?

Let’s first define what capital gains are. This is the income derived from the sale or exchange of property or assets owned by a taxpayer for non-business use. This means that the property is not used for trade or business. It’s also called capital asset.

To draw a clear line between what capital assets are, below are what they DO NOT include:

  • Real estate for trade or the business of the taxpayer
  • Property for trade or business and subject to an allowance for depreciation
  • Assets or properties for selling to customers for the usual trade or business
  • Any property or asset acquired by the taxpayer for trade or business and which are included in the inventory by the end of the taxable year

In this light, it would be good to know that not all non-business assets are taxed for capital gains. There are only two that are included. Namely:

Two specific properties taxed in the Philippines

  1. Real property that do not fall under the categories mentioned above hence not used for trade or business, and
  2. The sale of stocks of a Philippine-owned corporation

How are capital gains computed?

You get capital gains when you sell a property at a price that’s higher than what you paid for it. Tax is 6% of the fair market value of the property or the gross selling price, whichever is higher.

For stock shares, tax is computed based on the net gain. This means that expenses incurred from the sale of the stocks are deducted, and you are taxed only on what’s left. The tax rate is 5% for the first ₱100,000.00 and then 10% over ₱100,000.00.

8. What is an HR 201 Personnel File?

A constant headache for HR is to manage its employee records. Some payroll systems have the ability to integrate employee details so that it can be retrieved as necessary. It lessens the hassle of records getting misplaced or the tedious task of retrieving manual records. Below are the pieces of employee information that are included.

  • Full name
  • Date of Birth
  • Address
  • Contact information
  • Pag-Ibig number
  • SSS number
  • Tax ID number
  • Philhealth number
  • Educational records
  • Previous work history
  • Previous attendance and performance
  • Current Training performance
  • Performance assessments
  • Corrective memos
  • Other hiring requirements

9. Payroll in the SAP System

Suffice it to say; the SAP system enables businesses to integrate their functions related to human resources, logistics, payroll, financials, IT infrastructure, and so much more.

The purpose is to run payroll using this system is to ensure that it complies with the Philippines’ legal and business requirements. It should also be integrated with other components such as personnel administration, finance and accounting, and employee time management.

Its features include additions and deductions for standard reports for payroll, taxation, and other mandatory payments such as those for social security, health, and housing.

Standard payroll functions in the Philippines should include these:

  • Taxes
  • Social Security System (SSS)
  • PhilHealth
  • Pag-Ibig/Home Development Mutual Fund (HDMF)
  • Bonus payroll payments
  • 13th, 14th, nth month payments
  • Reporting
    • Monthly remittance of taxes
    • Monthly or quarterly SSS payments
    • SSS EDINet reports
    • HDMF remittances
    • Employer quarterly remittances
  • End-of-year reports
    • BIR reports on income tax withheld
    • Alpha list

SAP payroll also supports adjustments made to accounting, like in the case of changes to the master data or data for specific payroll periods.

10. What are De Mimimis Benefits?

These are benefits of very small value that’s given on top of an employee’s salary, and which isn’t subject to tax withholding. These include:

  • Daily meal allowances for overtime work that does not exceed 25% of the minimum wage
  • Rice subsidy amounting to ₱1,000.00 or a sack of rice per month
  • Medical benefits that do not exceed ₱10,000.00
  • Laundry allowance amounting to ₱300.00 per month
  • 10 days of unused leaves that are convertible to cash
  • Cash allowances to cover medical expenses of employees’ dependents that do not exceed ₱750.00 per semester or ₱125.00 per month
  • Clothing and uniforms not exceeding ₱3,000.00 a year
  • Employee achievement rewards in the form of material property that isn’t cash or a gift cheque, and with a value that doesn’t exceed ₱10,000.00, received under an agreed awards and recognition plan
  • and, Little gifts such as books, flowers, fruits or any similar item given to employees under special circumstances like the birth of a child, marriage, or illness

11. How to Compute Night Differential

All employees are entitled to night differential pay, amounting to not less than 10% of their regular hourly wage if they work between 10PM to 6AM. Below are sample computations by payrollhero.ph.
Details:

  • hourly rate: ₱60
  • Shift: 10PM – 6AM

Night shift on an ordinary day

  • Night differential = (hourly rate x 8 hours x 10%)
  • (₱60.00 x 8 hours x 10%) = ₱48.00

Night shift on a rest day

  • Night differential = (hourly rate x 8 hours x 10% x 130%)
  • (₱60.00 x 8 hours x 10% x 1.3) = P62.40

Night shift on a special holiday

  • Night differential = (hourly rate x 8 hours x 10% x 130%)
  • (₱60.00 x 8 hours x 10% x 1.3) = ₱62.40

Night shift on a rest day that’s a holiday

  • Night differential = (hourly rate x 8 hours x 10% x 150%)
  • (₱60.00 x 8 hours x 10% x 1.5) = ₱72.00

Night shift on a regular holiday

  • Night differential = (hourly rate x 8 hours x 10% x 200%)
  • (₱60.00 x 8 hours x 10% x 2) = ₱96.00

Night shift on a regular holiday that’s also a rest day

  • Night differential = (hourly rate x 8 hours x 10% x 260%)
  • (₱60.00 x 8 hours x 10% x 2.6) = ₱124.80

Night shift on a double holiday

  • Night differential = (hourly rate x 8 hours x 10% x 330%)
  • (₱60.00 x 8 hours x 10% x 3.3) = ₱158.40

Night shift on a rest day that’s a double holiday

  • Night differential = (hourly rate x 8 hours x 10% x 390%)
  • (₱60.00 x 8 hours x 10% x 3.9) = ₱187.20

12. How Do I Compute for Holiday and Rest Day Pay?

The Department of Labor (DOLE) requires a payment of an additional 130% on top of the regular hourly or daily rate for all employees who render work on their rest days or holidays.

For example, Jose’s hourly rate is ₱65.00, and he works for 8 hours a day. See sample computations below.

How Do I Compute for Holiday and Rest Day Pay

13. What’s the difference between regular and special holidays?

Regular holidays are those that fall on the same dates every year like New Year, Independence Day, and Christmas Day. Others though, fall on different dates like Maundy Thursday, Good Friday, Eid al-Fitr, Eidul Adha, and National Heroes Day.

Special holidays or special non-working days, on the other hand, occur on different dates. It also includes those that are declared by Congress or by the President. Specific cities, regions, or special occasions that disrupt work and school.

14. How to compute the 13th month pay

All employees who’ve worked for at least a month during the current year are entitled to 13th month pay that should not be less than 1/12 of the total basic salary earned.

For example, Juan’s basic salary is ₱17,000.00 and he worked in Company 123 for 8 months, his 13th month pay at the end of the year, is computed as follows:

(₱17,000.00 x 8 months)/12 = ₱11,333.33 (for more indepth article)

15. What are the functions of an accounting information system?

Gathering financial data for companies has gone through drastic changes through the years in the field of information technology. Most businesses aim for value-added service, quality, and efficiency. Therefore, an accounting information system is a software that businesses use to collect, store, analyze, and process financial information essential for their decision-making processes.

Running the financial numbers would give them a view of what processes need to improve, and what areas of the business can be expanded.

The basic function of an Accounting Information System are as follows:

  1. Collect and Process Data
    This is where accountants or bookkeepers track all funds coming in and out. It includes all cash sales, receivables, and payroll. The system then stores this information in a database.
  2. Forward Important Reports to Management
    Management can use the reports to strategically plan for future growth or for solutions to problems that are brought to their attention.
  3. Ensures Accuracy and Security
    Back in the day, businesses would hire third-party individuals or firms to do audits, study, and analyze their day-to-day operations for problem solving and growth forecasts. With the rapid turnabout of technology, businesses now aim to enhance efficiency and cost-savings hence, the need for an accounting information system came into play.

With technology, tasks that used to be completed by several people can now be done with only few. This fortifies the security of the system by limiting access. And in doing so, it’s easier to track transactions that have been processed, and facilitates ease of accountability.

16. Does Oracle do payroll?

Yes, Oracle offers payroll services that are meant to cater to your business needs to enhance efficiency, reduce costs, and errors rates. What are some services they offer?

Unique payroll solution

Oracle enables your company to run payroll in compliance with your business needs as well as payroll laws and regulations. For example, if you need to follow a certain payment frequency or need to recalculate payments, those can be done.

It helps your company be more efficient by allowing payroll to be processed for multiple employees within a short period. All financial reports can accessed any time.

Customizes your payroll structure

Business owners are always challenged in providing incentives for their employees. Oracle allows you to come up with more attractive compensation and benefits plans.

Fast Formula

This is Oracle’s unique feature that allows you to run rules and calculations suited for your business. Some features allow you to select the formulas you need, download and upload information, and generate specific templates.

Streamlines information

Oracle allows your business to keep a single database, helps you get rid of duplicate entries, and allows you to use as much information as needed to help in the business’ operation.

These are just some of several services Oracle offers for your payroll needs.

Key Takeaways

Remember, one of your goals is to ensure that you keep your employees happy by taking care of their financial needs, continuous personal and career development. All the information listed here is everything you need to know about accounting, payroll and audit firms that will help you reach the best decision in choosing the best payroll system for your unique business needs.

Maggie

Mag's is a market research editing and graphic design manager based in Qatar. As a freelance writer and editor, he covers personal finance, travel, careers, education, pet care and automotive.

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