The Many Ways Your Business Can Benefit From Offshore Accounting
Accounting is an important aspect of every company. Companies must keep track…
The Philippines is one of the fastest emerging markets and the third highest economy in Southeast Asia.
It has a strong and stable economy with hard-working citizens.
It has a population of almost 90 million people who are considered to be the second most confident consumers in the world.
This is the reason why many companies find it interesting to invest and start their business in the Philippines.
Many business owners from the international market are geared towards expanding their business because of the attraction of tax deductions and exemptions as well as a friendly offer of permanent residency for foreign investors.
However, with all the potential business opportunities in the Philippines, business owners and future investors must know that there is a lot of responsibility involved in looking after and managing a business in the Philippines.
One needs to be fully compliant with the Philippines’ labor laws as well as regulations that involve payroll.
Now, let us talk about the payroll system in the Philippines.
This is one crucial component in establishing a business which is under the Human Resource Department in coordination with Accounting.
Knowing the ins and out of handling the payroll system in the Philippines like calculating the employee’s salary, the inclusion of mandatory benefits and other voluntary and government-mandated deductions is imperative for every business.
Apart from doing the company’s payroll, HR and accounting are also tasked to do a plethora of things that will help grow the business.
More often there are payroll service providers that help ensure payroll processes run accurately, efficiently, and smoothly.
They help in paying employees accurately and on time, taking away the stress of these complex and time-consuming processes.
Or, another option that is widely practiced these days is having a payroll software system.
Using the payroll software system helps to keep the process constantly updated and compliant with the changing rules and regulations of labor laws in the Philippines.
How is payroll in the Philippines done?
Let’s look at what are the things to be considered while managing payroll in the Philippines.
Whether there are only 50 employees in your company or 5,000, The Department of Labor and Employment (DOLE) has given provisions for companies to follow as far as payroll is concerned.
Employers are mandated to comply with these payroll rules and regulations which will include the monthly withholding taxes.
Here are the following basic payroll contributions that need to be deducted from employee salaries every month.
Social security includes general social insurance that covers sickness, disability, old age, and maternity benefits of the employee.
The social security contribution is dependent on the salary of the employee.
For employees earning a monthly salary of P20,000, they are required to pay with the employer’s corresponding share of the said insurance coverage.
This is a national health insurance program in the Philippines that generally aims to provide quality health services in medical and healthcare for all employees.
At the same time, the employer also provides an equal share for their employees.
This is a short-term housing loan or program that is provided by the government to employees.
It is a national savings housing program to help Filipinos have their own house and property.
This is the amount that is deducted as income tax and directly deducted from the salary by the employer.
This applies to individual citizens and resident aliens earning an individual salary and compensation and also individuals engaged in business and practice of the profession.
Shown below are the graduated Income Tax Rates under Section 24(A)(2) of the Tax Code of 1997, as amended by Republic Act No. 10963.
|Amount of Net Taxable Income||Rate|
|Over||But Not Over|
|P250,000||P400,000||20% of the excess over P250,000|
|P400,000||P800,000||P30,000 + 25% of the excess over P400,000|
|P800,000||P2,000,000||P130,000 + 30% of the excess over P800,000|
|P2,000,000||P8,000,000||P490,000 + 32% of the excess over P2,000,000|
|P8,000,000||P2,410,000 + 35% of the excess over P8,000,000|
With all these deductions, employees are required to be provided with a payslip which can be either printed or available for online access and downloading.
Foreign companies that are new to the Philippine market need to develop a payroll solution that takes care of the employees’ compensation requirements.
Generally, doing payroll is a tough and complicated job.
Salary adjustments and net pay is hard to compute when done manually.
Computation of an employee’s salary and taxable income can be done swiftly and accurately with user-friendly payroll software in the Philippines.
Manual and traditional payroll is almost extinct.
There are better options to do payroll in the Philippines.
Many companies prefer to have a partner who can do payroll processing for them.
The service is provided by the payroll provider who then provides payroll software that is compliant with the employment regulations in the Philippines and takes care of all the calculations related to the salary payment.
Companies who have the capacity to do their payroll can actually run their own with the help and assistance of bankable payroll software that can handle withholding tax and other mandatory deductions provided for by Philippine labor laws.
They can also have personnel who are knowledgeable enough to do the payroll by themselves.
Taking into account the numerous complexities associated with payroll regulations in the Philippines, the best option is to have a payroll service provider like EasyHR.
It basically helps your HR team manage employees through robust record-keeping and payroll functions and has the following standard features:
EasyHR enables users to see the employee’s detailed records including General Information (Address, Contact Numbers, Email, etc.), Payroll Details, Salary, Government statutory deduction details and numbers (TIN, SSS, PHIC, HDFM).
It also shows the History of Changes and who made such updates in the 201 File records.
Users can also attach documents under the Memo tab purposely supporting changes in the 201 Filing.
Txt files or CSV Logs that are uploaded in the EasyHR will be computed automatically.
Users will no longer have to manually compute for Lates, Undertime, Overtime, Absences and Holiday Pay computations.
EasyHR also automatically computes standard Philippine Payroll including Statutory and mandatory deductions with ease and saves a lot of time in computing accurate net pay for Employees.
EasyHR allows an unlimited number of employee Loans (Ex. Cash Advances, SSS Salary and Calamity Loans, HDFM Loans, etc.) monitoring.
This will automatically reflect in the employee’s Loan Ledger as well as the Employees payslips.
Flexible and definable Leave Types that allows your HR staff to input employee’s Leave Types and Leave Credits.
EasyHR can view the history of Leaves already availed of by an employee.
Allows employees to log in to EasyHR and check their records online.
Instead of checking or having a hard copy of their payslips, Daily Time Records, and even loans.
All they need to do is check on their own the Employee Self Service portal and view these, saving both the employee’s and the HR personnel ‘s time.
EasyHR is capable of handling multi-company with multiple branches.
It will be very easy for a company to monitor a group of companies with multiple locations and branches and saves a lot of money and time.
Let us do payroll in the Philippines though EasyHR today, Book a demo today! https://human-incubator.com/easy-hr/
EasyFIS is a Software-as-a-service (SAAS) sales, inventory and Accounting system designed for Micro, Small and Medium (MSME) Enterprises.
If you want to manage your business in real-time and in a WFH Work from Home Setup, EasyFIS can provide a turn-key solution to your most common business problems to effectively monitor your sales, checking your LIVE inventory stock quantity and most importantly the status of your business’ financial health.
On top of that EasyFIS is CAS (Computerized Accounting System) compliant ready for government taxation in the Philippines.
EasyHR is a Software-as-a-service (SAAS) web application that helps to manage your Payroll and Human Resource Tasks easily and effectively.
Whether you are handling less than ten (10) employees or up to more than ten thousand (10,000) employees, EasyHR can do the job for you and saves you a lot of time in computing your Payroll and managing your Employee 201 Records anytime and anywhere.
But not only that, EasyHR further has an Employee Portal that allows your employees to access it online and check their own Payslips, Overtime, Leaves and Time Records. It saves a lot of time and money in printing these Payslips and paper wastage.
EasyPOS is a standalone Sales and Inventory system designed for businesses with Physical Stores and does not necessarily need an Internet or cloud solution.
The software is very easy to use yet already fully loaded with the necessary daily functions in running a store.
It already has a complete Sales and Inventory system with Item components.
Barcode and Touchscreen Interface that can be used for both groceries and restaurant setup respectively. Plus it is already BIR Accredited to legally issue Sales Invoice (SI) and Official Receipts (OR).