Types of payroll solutions for businesses in the UAE

From simple do-it-yourself platforms to high-end systems and experienced professionals, the payroll industry has developed a wide range of creative payroll outsourcing solutions. With so many options, it can be difficult to decide which one best suits your business.

In this article, we will explain the different types of services to help you make the best choice for your business. The last thing you want is to pay a lot for payroll services in the UAE only to find out they do not meet your business needs. For example, you may pay for extra services you do not want or use just because a package includes those items. You can prevent this situation by learning the following:

  1. What is the payroll process about?
  2. What is a payroll outsourcing solution?
  3. Why use a payroll outsourcing solution?
  4. Types of payroll outsourcing solutions
  5. How can we help you choose and implement the best payroll outsourcing solutions for your business? 

1. What is the payroll process about?

A payroll administrator should give a descriptive overview of the entire payroll process. There is constant work managing ongoing tasks that require attention and constant monitoring of changes in tax withholding, contribution and other aspects to be considered in the process.

The payroll process can be divided into 3 phases: pre-payroll, actual payroll, and post-payroll occupations. Take a look at the following:

1.2 Pre-payroll activities

  • Defining policy: In this first phase, the business’ policies must be pointed out, such as the payroll policy, permissions, and benefits. You must ensure that these policies are clearly understood and signed by the company’s management so that standard payroll processing can take place.
  • Collection of input data: The interrelation between different areas of the company and the payroll is normally an important part of the process. These individuals will provide better access to important information, such as wage reviews and worker attendance. The process might be more established in smaller organizations and stronger in larger companies. Gathering this data can be overwhelming, but the payroll system has integrated features like leave and attendance management and employee self-service portals to make the job easier.
  • Entry validation: The next thing in this process is to verify the accuracy of the entry data and if they adhere to the business policy. Make sure that no active employees have been lost and that no inactive employees are included on the payroll.

1.2 Actual payroll process

  • Payroll computation: In this phase, the input information is entered into the system to process the payroll. This process generates a net payment once taxes and legal deductions have been adjusted. Once the process is completed, it is recommended to reconcile the values ​​and analyze the accuracy to avoid errors.

1.3 Post-payroll process

  • Legality: At the time of processing the payroll, all legal deductions are made. The payroll person then forwards this information to the appropriate government agencies.
  • Accounting: It is important that companies keep a record of all their bank movements to carry out the payroll process. Salaries are one of the most essential parts of operating costs to be recorded in the book of accounts. Payroll management must always ensure that all salary and refund data is accurately entered into the company’s accounting system.
  • Payment: Normally, the salary is deposited in the employee’s bank account. Although it is also possible to pay wages in cash or check, among others, it is not the most usual. Once the payroll is processed, the company’s bank account must have sufficient funds to make the corresponding payment. Next is to obtain a payroll bank statement from the company’s branch. This document contains details such as employee ID, bank account number, and salary amount. If you use a payroll system that has employee self-service, it will be easier to post payslips and employees can log in to access their payroll.
  • Reporting: After you have completed payroll for a special month, your finance department or management team might ask for a report on things like department employee costs or location employee costs. The payroll clerk must collect the data and extract the information to deliver the corresponding reports.

2. What is a payroll outsourcing solution?

A payroll solution is an application used to manage, organize and automate employee payment. The system tracks all payments and maintains all payment records. Payroll solution varies in price and features and can be used by small business as well as large corporations.

An effective payroll system will allow management to monitor time and attendance, tax information, and pay structure. The system will integrate easily into existing company procedures.

Payroll solution is created by third-party human resources technology companies that aim to enhance the operations of businesses that utilize their system.

3. Why use a payroll outsourcing solution?

The workers perform their duties strongly for the company and for the clients. People keep a business running. Of course, the company intends to pay its employees the salary they deserve. But managing the payment of workers is not an easy task. In fact, many times it can become a cumbersome activity.

That is why many companies rely on payroll solutions, an on-premises or cloud-based system that helps ensure proper processing and payment of company payroll without problems. If the company is managing payroll manually, it is vulnerable to human errors that can be costly. Investing in a payroll system can save time, work, and money.

These are some reasons why payroll systems are highly useful:

3.1 Employee morale

Undoubtedly, to keep employees motivated and happy, one of the most important factors is that their payment is made within the time agreed by the parties to the employment relationship.

You can count on a payroll system that pays your employees on time and consistently. Without a doubt, if this is not the case, this situation will negatively affect the morale of the employees. 

Untimely and inaccurate payments may cause the employees to question the financial stability of the company. This could negatively affect the work environment, which would give rise to a demotivated attitude of the employees that could generate a low performance in the fulfillment of their work activities.

Employees are normally the soul of a company and a secure payroll is a fundamental part of the company’s job stability.

3.2 Compensation

Payroll goes beyond an employee’s salary. A worker’s pay may contain benefits in addition to salary. For its part, through the payroll system, benefits and salary increases are also managed with respect to the performance of the employees.

3.3 Reputation

A company not only has the obligation to pay the wages of its workers but must also comply with the tax and labor legislation of the country.

Complying with the laws correctly makes a company look stable. This vision of a reputable company will attract and retain top talent.

3.4 Government reporting

One of the main attributes of a payroll system is that it facilitates the task of complying with tax and labor legislation.

A company will send information about the payroll tax withholding, the respective payments, and the status of the employees to the government in the time established by the law of each country. And this information must be truthful and verifiable.

3.5 Complying with laws

Each country has its legislation regarding this matter. Payroll systems must be adapted so that this process automatically complies with the law of the country. In case there is a change in the legislation, the service provider must adapt the system to the new legislation.

3.6 Paying taxes

According to the tax legislation of each country, to comply with these regulations, companies must withhold income and payroll taxes and be up-to-date with the payment of these taxes.

Companies often bear the cost of employee benefits, and a portion may depend on gross salary. Also, for most payroll, a company’s payroll system will withhold statutory taxes.

4. Types of payroll outsourcing solutions

Here are the different types of payroll outsourcing solutions:

4.1 Accountants and auditors

There are bookkeeping and bookkeeping organizations that, in addition to conducting financial audits, also do payroll. Their downside is that they also tend to outsource payroll tasks assigned to them based on their skills.

This can lead to a potential risk of confidentiality and stability issues as the process progresses. Also, because of their extensive understanding of industries and company sizes, they may not know the best advice or support to give specific to your particular business needs.

4.2 Internal payroll

That sounds simple and appropriate since you are in the organization. However, internal payroll requires various resources in terms of time, expertise, and Human Resources. What if a regulatory compliance error occurs? Your trade will bear the brunt.

4.3 DIY program services

Do-it-yourself payroll software is similar to in-house payroll, only without the payroll professionals. Consequently, you save the price of hiring in-house professionals which is a benefit. The downside is the greater risk of errors and compliance issues that can result from a lack of understanding of the payroll industry. Read this article for more.

4.4 Small payroll providers

These providers offer the best of both worlds by providing the relevant technology and expertise and services tailored to the specific industry. With this alternative, you also have someone you can liaise with directly once you discuss payroll issues and needs.

However, certain small payroll providers may have restrictions, including:

  • Limit the number of users
  • Possible loss of information due to inefficient backup options
  • Risk of instability and system crashes

4.5 Average payroll providers

As your business grows and expands, so do its payroll needs. As a result, it is possible that you will need to use subcontractors who work at a higher capacity. It is easy to accidentally hire the services of major payroll providers at this point. Most of them offer services in packages and it is possible that you end up paying for services that you do not actually use.

However, processes remain mostly well streamlined, tend to be more comprehensive and have various HR services add-ons that are likely to be useful. Thanks to the additional and sometimes complicated resolutions, they have the opportunity to create confusion in what they give.

Additionally, such providers tend to be less personalized than smaller payroll providers due to their greater reach and broader customer base. Finding the supplier that suits your business is important.

4.6 Big payroll providers

As the name suggests, the major payroll providers are best suited for relevant companies with a workforce of well over 10,000. It makes more sense to consider them as your business continues to expand. They offer cutting-edge technology and a premium experience. The thing is, you lose the personal touch that small payroll providers offer instead of more functionality and a more versatile approach.

Understanding superior payroll solutions for a business is one thing, but it is another rollercoaster ride when you are also growing and expanding. You want to take the good medicine, start trading today, and be ready to grow and expand tomorrow.

Do not be in a hurry to get the top-notch service the business does not need. Taking the time to understand the skills, vendors, and processes is important to ensure you feel confident in this area of ​​the business.

5. How can we help you choose and implement the best payroll outsourcing solutions for your business? 

With more than two decades of experience offering the best solutions for diverse organizations across the Middle East, our agency is ready to take your HR department to the next level. We can provide your business with comprehensive payroll solutions. Our payroll outsourcing services perform this important administrative activity through a standard and control process that helps the company evolve and progress.

We are currently in 14 countries offering our best outsourced solutions. As a result, many organizations are choosing us to become their #1 HR software provider. We take pride on what we best do. So, feel free to share your inquiries and requests if you are from any of the following locations:

Would you like to contact us to discover more about payroll outsourcing in the UAE? Reach out via email at [email protected] to request more information or to share any concerns you may have. Our team will carefully review it to send you a complete answer and actively assist you. We are at your disposal!

Also, if you wish to become an employee in one of the many companies in the UAE, visit thetalentpoint.com. On this portal, you will find an extensive variety of job opportunities you can easily apply for. In addition, you can always send your CV and cover letter to [email protected].

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