How to Setup Payroll System

Getting Started

You need to setup a payroll system, immediately your business starts to employ staff. This article seeks to help you to know what it takes to run an efficient payroll system.

Staff will normally be paid monthly, weekly, or fortnightly. And employers are expected to issue written pay statement to employees for each salary payment. The written pay statement is popularly called payslip.
Payslip is also called wage slip, or info slip.

Payslip shows gross pay, deductions, purpose of deduction, and net pay (that is, take-home pay). To prepare a payslip, you must know the following:

  1. You must know how much to deduct from an employee's pay

  2. You must know how to calculate gross pay which is total allowances for each employee.
    Gross Pay = Basic Salary + Housing Allowance + Transport Allowance + Other Allowances

  3. Therefore, take-home pay, also called Net Pay is
    Net Pay = Gross Pay - Total Deductions

    You will find this salary calculator tool useful.

  4. You must know how much tax to deduct. See the tool tax calculator

  5. You must know how much to deduct for pension. See the tool pension calculator