Ever had a friend promise something and not deliver? It's such a letdown, right? Well, imagine that happening with your employees’ payroll. Even just a slight delay or error in their paycheck, and frustration starts to build almost immediately.
Yes, managing payroll for a small business may seem challenging. But think of it like this: payroll is not just about money—it’s about following the law, keeping employees happy, and ensuring your company’s financial systems work properly. Indeed, making sure your employees get paid on time and correctly shows you're a reliable boss and employer. So, how can you make sure you’re doing payroll the right way? Let’s go step by step.
1. Understand the Ins and Outs of Payroll
The payroll system in the Philippines is not just about employees’ base salaries. Some companies also give allowances for transportation, meals, and communication. Moreover, you are required to provide 13th-month pay to eligible employees, arrange for government-mandated benefits like SSS, PhilHealth, and Pag-IBIG, and deduct the correct amount of tax based on BIR guidelines.
On that note, be careful when making deductions. Unauthorized salary deductions are illegal and can lead to complaints. For example, if an employee breaks company property, you cannot automatically deduct the repair cost from their salary unless both sides agree in writing.
Furthermore, employees should understand how their salaries are structured. So, you have to provide a detailed pay slip with clear information about deductions and allowances to prevent misunderstandings.
2. Set Up a Good Payroll System
Some small businesses pay employees in cash. However, this method has risks. For one thing, keeping large amounts of cash on site can lead to theft, loss, or errors.
A safer, faster way to pay salaries is through digital banks like Maya. As the number 1 digital bank in the Philippines, we offer digital banking solutions like Maya Business Deposit, which has a fund disbursement feature that can be used to efficiently and securely pay employee salaries and benefits. With Maya Business Deposit, employers like you also benefit from a much higher interest rate of 2.5% per annum, which is 20 to 25 times higher than what you can expect from traditional banks. This means your business funds don’t just sit idle—they grow while you’re enjoying an efficient payroll management system.
3. Pay Employees on Time and Accurately
Your employees depend on their salaries to pay rent, buy food, and support their families. If you delay payments, they may struggle financially and become unhappy. However, paying on time is not enough—payments must also be accurate. Imagine working hard for a month and then getting paid less than you expected. That would be discouraging.
To avoid these problems, proactively schedule all critical payroll dates and deadlines for the entire year, including paydays, holidays, and tax filing deadlines. Additionally, use automated notifications within your team's existing communication tools or create a shared payroll calendar to keep everyone informed and on track.
4. Be Well Versed in Labor Laws
The Department of Labor and Employment (DOLE) requires businesses to follow minimum wage laws, overtime rules, and holiday pay guidelines. If you don’t follow these and other labor rules, you could face fines or legal action.
For example, you could be tempted to classify full-time employees as independent contractors to avoid paying benefits. This may save money in the short term, but if an employee files a complaint, DOLE may require you to pay all missed benefits, back wages, and penalties.
Furthermore, if you do work with freelancers and remote workers, it’s still important to follow fair payment practices. Always set clear payment terms in writing, including the payment schedule, method of payment, and any penalties for late payments.
5. Set Aside Payroll Funds
One major reason businesses struggle with payroll is poor financial planning. This is especially difficult for small businesses where income may change from month to month.
To avoid this issue, separate payroll funds from your operating expenses. One good strategy is to create a payroll reserve account with Maya Business Deposit, which allows you to efficiently manage payroll funds with high interest and regularly set aside payroll funds ahead of time. This ensures that even when business is slow, you can still pay employees on time.
It’s also important to plan for salary increases, new hires, and seasonal bonuses. If your business has busy and slow months, prepare for times when cash flow might be tight so you can still give your employees what they’re due.
Make Payroll Work Efficiently with Maya Business
Payroll is more than just an administrative task rooted in compliance—it’s a reflection of how well you run your business. When done right, it builds trust, improves morale, and helps create a positive workplace culture.
Sign up for Maya Business to give your business a competitive edge through an efficient payroll management system.
Setting up a Maya Business account lets you open a Maya Business Deposit account and use it as your settlement account. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. Furthermore, you’ll be able to send money to your partners and suppliers for free via InstaPay and PESONet, letting you save more.
Signing up also qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months, allowing you to have another funding source to further develop your business. Just use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.
Sign up for Maya Business today to enjoy the benefits of Maya Business solutions.
