How to set up a payroll management in Saudi Arabia in your small business

PeopleQlik #1 Payroll management in Saudi Arabia It is difficult to manage payroll management systems as compliance rules and regulations change all the time. Startups and small businesses have a lot of trouble processing and documenting payroll.

Using the best payroll software can rule out many of such complications. But you must know how to manage payroll. This is how to set up a payroll management system in your small business.

PeopleQlik #1 Payroll management in Saudi Arabia

How to set up a payroll management in Saudi Arabia in your small business

How to set up a payroll management in Saudi Arabia in your small business

Select the right payroll software

First, find the right payroll software for your needs. How do you choose the best payroll software?

  1. List your non-negotiable requirements.
  2. You should research the type of payroll system that is best suited to your industry.
  3. Take a look at the various pricing options available in the market.
  4. Get a FREE trial for some potential payroll.
  5. Choose the best.

This is an important step that will pay off in the long-term. A payroll system in Saudi Arabia can also help you keep track of all data.

Collect information to prepare for your payroll

You then choose the best payroll software.

Some of the information include:

  1. Name, position and other basic information about employees.
  2. Social security numbers
  3. Current contributions and deductions
  4. Status of tax filing

These details will help you set up your payroll.

  1. Register for an Employee ID Number (EIN).
  2. Get a tax ID number from the state for each of your employees.
  3. You can schedule the payroll process monthly or weekly.
  4. To calculate the employee’s working hours, use a time track.
  5. For payroll reconciliation, open a bank account in your business.
  6. Collect the bank details of your employees.

Calculate the Gross and Net Pay

You now have the necessary information to process payroll. Now you can calculate the paychecks. Collect timesheet data including overtime. Check if your payroll management in Saudi Arabia integrates or has one already.

Now, subtract the tax deductions from the gross pay. You will need to subtract the payroll deductions, in order to get the net pay.

These are the payroll deductions:

  1. Pre-Tax Deductions – Health insurance, retirement plans, and social security taxes
  2. Tax Withholdings – State, federal, and local income tax withholdings
  3. Post-Tax Deductions – Insurance plan contributions and 401(k), contributions, wage garnishment

Incorporate the Employer Payroll Taxes

Employers must pay taxes based upon employee compensation. This includes Federal Unemployment Tax, State Unemployment Tax, and other local taxes.

Before you send your paycheck, ensure that your payroll reconciliation is done correctly.

Even though it may seem redundant, errors can still occur in software.

Set up a payroll entry system

Payroll software that integrates well with accounting software allows for easy payroll journal entry. This includes payroll taxes, employee wages, and payroll deductions. No matter which mode of payment you use, attach your pay stubs when you send out a paycheck. Employees can then cross-check for any errors.

Be sure to document the terms of your compensation

Once you have paid your taxes, you should check the quarterly tax payments to make sure you are paying the correct state taxes for employees who live in other states. To do this, employees will need a state tax ID. This can be obtained from the relevant state tax website. To enable automatic payments through software, you will need to make the first payment manually.

Create the payroll documents

After all the payroll management in Saudi Arabia has been completed, there’s one more important step. You must send previous earnings reports, such as W2, W1, and W4, to your employees each year.

This may not be obvious. Nevertheless, payroll software can be used to help you with your payroll deductions.

It is also a good idea to consult an auditor in order to verify the tax documents.

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Call us at +966547315697 or contact for a demo. The Payroll Management  in the Saudi Arabia team will be happy to serve you.  

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