Having a business in Nigeria is such an exciting thing. If you are planning to establish or have already established a business in Nigeria, you must get many things done before you fully dive into the hustle and bustle of the Nigerian market. One of those things you shouldn’t toy with is Payroll Setup and management. As boring as this might sound, it’s proven to be the pillar of thriving businesses. This is because it deals with how to ignite happiness in your employees and sustain the same by avoiding litigation. Thus, this article will furnish you with how to set up payroll in Nigeria step-by-step.

One of those things you shouldn’t toy with is Payroll Setup and management. Most companies run payroll globally.

What is payroll?

Payroll is like a report card that contains your employees’ financial details. It tracks and houses their salaries, wages, bonuses, allowances, and deductions. This could also mean their total take-home amount after all the calculations.

The importance of this isn’t just about paying your people as and when needed; it’s about compliance with the required directives. Nigeria, as a country, has strict laws and regulations guiding payroll. For instance, the government has the Personal Income Tax Act and the Payment of Wages Act. When you comply with those Acts, you are one step away from the wrath of the authorities.

The most easiest way to set up payroll in Nigeria is by using Paybox360. We automate your payroll processes and make it easier t

What are the stages of payroll processing?

Below is a step-by-step analysis of setting up payroll in Nigeria.

First Stage – Preparatory Stage:

• Information Gathering: You will gather salaries, bonuses, leaves, and other allowances and benefits.
• Calculation: Here, you will figure out gross pay, deductions, and net pay and calculate them.
• Verification: You must proofread and fact-check everything to avoid any embarrassing mistakes.

Second Stage – During Processing:

• Payroll software: For larger companies, software can be a lifesaver. One of the best in town is Paybox360. It automates most of the processes, making things faster and easier.
• Human touch: Regardless of software availability, you still need people to oversee the process and make decisions.

Third Stage – After Processing:

• Taxes and deductions: It is time to pay the government their share and deduct things like health insurance.
• Payday: The moment your employees have been waiting for! Pay them through bank transfers, cash, or whatever method works best.

Comply with the Regulations:

It is important to consider compliance and regulation while looking for solution to the question “How Can I Set Up Payroll in Nigeria?” In a bid to keep payroll setup legal in Nigeria, you need to follow these certain requirements. These are:

1. Minimum wage: As of 2023, the minimum wage in Nigeria is ₦30,000. To avoid any forms of litigation, ensure you’re paying your employees at least the amount earlier stated.

2. Statutory reporting: Reports are meant to be submitted to the government. Hence, this means submitting reports to the government, like the Employer’s Annual Declaration and the Employee’s Annual Return of Income and Claims, are very crucial.

3. Tax Clearance Certificate (TCC): Basically, this is a proof of good record with the tax authorities. These are needed by your employees for various things, like applying for loans.

4. Record keeping: Good payroll management entails good record keeping. This involves pay slips, tax documents, and employee contracts.

What happens if you fail to comply?

Cutting corners can be detrimental, so don’t do it. However, if you by chance offend any, these are the consequences for the same:

• Fines and penalties: The government doesn’t mess around regarding taxes.
• Bad publicity: No one wants their business associated with tax evasion.
• Legal trouble: In worst-case scenarios, you could even face criminal charges.

Getting help with payroll

Setting up payroll in Nigeria has many challenges, especially if you’re a newcomer. Don’t be afraid to seek help! There are plenty of professional payroll companies that can take the burden off your shoulders, and that is where Paybox360 comes into play.

Final Thoughts

A smooth-running payroll system is important for any business in Nigeria. By understanding the basic setup procedures and following the rules, you can keep your employees happy, avoid legal trouble, and focus on what you do best: running a successful business.