Mindful of the looming deadline of the end-of-year payroll duties, companies handling such activities in-house are likely to panic, to no surprise. For inexperienced staff, even monthly payroll can be a tedious task to tackle. One single error during the end-of-year submission can result in an avalanche of extra clerical errands to run. It is no wonder that companies that have already outsourced payroll have benefited from it.
One of the monthly payroll duties of a company in Malta includes submitting an FS5 Form to the Commissioner for Revenue (CfR)—beyond, obviously, paying employees promptly and providing them with a payslip. This form is used to register the income, taxes, social security contributions (SSC) and maternity leave fund contributions (MLF) related to all employees, and there is a deadline by when it needs to be submitted and paid.
Unless all handled promptly, companies would face unpleasant penalties. Staff can come under significant pressure if payroll is only one part of their monthly duties.
End of the year payroll complicates the scenario even further. A company has to file an FS3 form for each employee to the CfR, and one FS7 form for the company. The paperwork is done under the employer’s obligation to declare the wages, salaries, fringe benefits, deductions and maternity fund contributions of all their employees to the CfR annually.
Starting from 2018, businesses who employ a staff of ten or more are required to submit their FS3 and FS7 forms online, while those working with a staff complement of nine or less can send by snail mail, submit it in person at the CfR, or still opt to file online. There is a deadline for these submissions, naturally.
While handling payroll does not compare in complexity to landing a Jumbo Jet in drizzling rain and crosswinds, it may very well feel like that for staff who are not exclusively focused on administration and need to do it beyond their usual duties.
Working under the pressure of lurking hard deadlines, and spinning many plates at the same time to cope with the restraints of time, will cause errors which might overshadow employees’ mental health at work, deteriorate performance and waste valuable resources. This is because administrative errors bite back: forms need to be revised and corrected, while late payments come with penalties, and more time wasted.
If we consider Malcolm Gladwell’s 10,000 rule—supposing that in-house payroll staff applies utmost attention—in principle, the more time staff spend working on payroll, the better they become, since they work on payroll-related tasks at least twelve times a year. Payroll professionals accumulate even more expertise for having multiple clients and also becoming more experienced by the month. However, it’s also essential to factor in the possibility of high staff turnover that would lead to continuous training of recent arrivals.
Nevertheless, the end of the year payroll run happens only once a year, the hiatus between two submissions is long, thus slowing down strengthening one’s experience on the job. When preparing end-of-year payroll, there is a handful of points that your business staff should pay attention to, to make sure you run into as few errors as possible.
The government budget is always an important factor that your staff dealing with payroll administration has to consider. Any changes or commitments recorded in the budget related to COLA, social security rates and benefits, taxes, fringe benefits and leave entitlements amongst others, have to be factored into your company payroll.
During January, any change to the new year’s budget will increase the workload of your employees handling payroll in-house. Whether you do payroll manually or use software, you will need to make sure that the changeover is dealt with promptly. During this time, your employees will also have to prepare all submissions for the Commissioner for Revenue.
As the new year kicks in, take time to include the public holidays in your payroll calendar, ensuring that the new year and new timing will not interfere with your payroll administration. Meanwhile, keep your leave balances tidy: considering your corporate policies, register any of the annual leaves that your employees are carrying over to the coming year.
Your business should keep a heavy reliance on internal resources if you handle payroll in-house. Even if you use payroll software, you need to make sure that your staff can handle all the settings and changes to enhance independence. You will not need external help that can significantly slow down your internal processes, not to mention that you will have to fork out extra expenses.
Should you feel that handling payroll operations internally puts too much pressure on your staff—your most valuable resource—you may consider getting specialised experts on board.
Outsourcing your payroll comes with many benefits, and if you take the time to follow the right steps of outsourcing your non-core activity, your business operations will receive an instant boost, as you will save human and financial resources.