Different Factors to Consider when Adopting a Payroll System for your Small Business in Davao

Be it your choice to hire employees or not, if your small startup business is steadily growing on a rapid scale, hiring will not just become an option rather a must.

There will always come a time in your business life that you’d need the help of someone else trustworthy to do some of the integral tasks you deem important for your company’s daily grind.

They’re called employees. You have screened them according to your vision, their skills and qualifications and their consent towards an agreement of legality and his or her tenure of service needed for your company. Everything’s been settled down and ready for execution but another problem arises. Since your company has doubled the time for production or service, then profit must have been keeping up with this trend. You get money because of the people working for you. So give them what’s due by also keeping up on their salary.

It works on a mutual professional relationship wherein one gives and takes, vice versa. If you’re now starting to discuss about putting up a payroll system in use for your small business, you can glean over 2 choices you can make.

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2 types of payroll system

In House – there are two more options listed down here. You can try (a) manual or (b) computerized. If you choose A, it sure will become a workload but this is ideal at first since it’s cheaper and you don’t have a lot of employees yet anyway. Electronic payroll systems are also good for small to mid-sized businesses since they offer more convenience and ease of use.

Common disadvantages for manual system: more prone to errors and if the personnel in charge of payroll is not knowledgeable about laws then results can become inaccurate.
Common disadvantages for computerized system: costs more to implement since investment must be done on equipments, necessary software and excessive training.
Outsourced – Here’s another popular option since if the other two listed above are all done by your own employees, you get to erase that responsibility off their hands if you choose this method. This has always been proven cost-effective and time saving for clients who want more work done instead of focusing on this trivial task. Added worth will be given into your spending if you hire expert firms offering accounting services in Davao that specializes in mass payroll for different types of company.
Common disadvantage: It is the most expensive option among the two, and if there are any queries that would arise out of the process then needed attention may not be readily given.


What fits best into a small business?

There might be businesses with the same line of work and type of service and this question surfaces because accounting services will most likely be a different thing. Different companies may need different services just like how a boss needs to relate to his subordinates in varying angles.

As a basic step, assess your needs first. Start with a checklist of questions.


  •     How many employees are needed as of the moment?
  •     Do I intend to extend operations through franchise, extension offices and branches in different regions?
  •     What is my business’ orientation? (Service, product based or both?)
  •     Will I encounter seasonal staffing?
  •     How inclined are my employees to new technology regarding payroll?
  •     Is there any help needed to keep track of every personal record?
  •     Can I integrate payroll services with other needs such as deduction and cash advances?


Of course, these are just prototypes, samples so to say. What you really need to do is determine the unique need yourself so you can end up becoming more of an informed business owner.

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Where do you get help?


If you choose in-house payroll systems, you only need to screen applicants who have background on general human resources work, anyway accountants or non-HR personnel can still do the counting or you can train them to do so.
If it’s the other way around, then choosing a reliable accounting firm becomes pertinent. Referral is one of the best ways to picking the right one but you must also cross-check their full line-up of services, their expertise, and qualifications of the personnel they have. If you run into referrals, ask the party if they were satisfied, what setbacks did they experience and the real amount needed for such service to become a reality. Accounting services by Davao firms are always ready for scrutiny through inquiring calls or emails, and it is also not difficult reaching them physically either (due to Davao’s light traffic conditions and of course the comfort of the internet).
But before settling down for an outsourcing partner, make sure you have terms and conditions in black and white so liabilities and responsibilities of both parties are stated early on in such an important business undertaking.


Learn the basics

Setting up a payroll system doesn’t vary that much regardless of whether it is outsourced or not. You still have to abide by rules and regulations set up by local governing bodies such as municipal or city office and the omnipresent BIR (Bureau of Internal Revenue). In here is laid down the basic steps that aren’t to be missed.


  1.  Acquire employer certification or registration number from BIR. But you also need to register with Social Security System, Philippine Health Insurance Corporation, and the Housing Development and Mutual Fund.
  2. Clarify payroll policies. Cover working hours, days-off, overtime, leaves, holiday pays and other benefits, as attuned with labor laws ( http://www.nwpc.dole.gov.ph/pages/DOLE_DO_118-12.pdf).
  3. Determine type. Manual payroll systems require timecards while electronic systems use biometrics and the like. If you have adopted the latter, then outsourcing companies may help you in the process of choosing the best software (Quickbooks, Sage, Peachtree).
  4. Set payment schemes. What days of the month, how frequent and what type of remittance will you use must also be discussed.
  5. Conduct information drives. It helps to make your employees more informed of their tax situation, different labor laws and transparency on the conduction of their own salary computation.
  6. Retain privacy. Salary must be a personal thing, and mustn’t be shared to persons that aren’t concerned. This lessens troubles in the office and keeps professionalism checked.

Managing payroll systems aren’t much of a worry nowadays if, as a business owner, you know the different prerequisites needed to run one properly.



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