The Beginners Guide to Payroll for Small Businesses

Thailand has become quite an appealing place to start an SME — especially for foreigners. With its fast-growing economy yet highly affordable living costs, it’s unsurprising that many aspiring entrepreneurs from around the world want to venture into the Kingdom. 

But as rewarding as doing business in Thailand can be, it also comes with its own set of challenges. One of these is payroll, which is (understandably) the bane of many business owners. Even so, it certainly pays to know the process works here, even if you plan on outsourcing to a payroll service. 

To get you started on the right footing, here are some basic tips to help you manage your payroll with more ease. 

Why Should Entrepreneurs Learn the Basics of Payroll? 

Payroll is one of the most important non-core activities you have to do if you want to keep your business running in Thailand. After all, it involves paying your employees their proper dues. 

Failure to handle your payroll properly can lead to a range of problems, including:

• Potential Thai labour law violations, which can have criminal penalties ranging from fines to imprisonment

• Disgruntled employees who will likely be less productive or may quit and sue your company for not calculating their wages or benefits correctly

• Wasting too much time rectifying computation errors in payslips

• Cash flow issues due to poor budgeting for payroll

  
  

Simply put, knowing your way around payroll can lead to happier employees, smoother operations, and fewer issues with Thai authorities — all of which are essential to your success in Thailand. 

Key Payroll Pointers for Your New Business in Thailand

Study the Payroll Rules

Thailand’s labour laws contain clear guidelines on the various aspects of payroll. These include:

• The minimum wage rates per province 

• Monthly salaries

• Overtime and holiday pay 

• Personal income tax rates and required social security contributions

• Mandatory leave entitlement

  
  

Do make time to familiarise yourself with these regulations so you can reduce the errors you make when it’s time to process payroll again. 

Have Consistent Payment Schedule

Most Thai businesses follow a monthly pay schedule, as is the minimum requirement. However, you can also decide on a frequency that works best for your current cash flow. For instance, you may find it more comfortable to issue payslips every two weeks instead. 

Always Update Employee Info

Up-to-date employee records, which include details like Tax Identification Numbers, employment contracts, and available leaves, will help reduce any errors when it’s time to deal with payroll again. For instance, it would prevent issues like accidentally paying a permanent employee the rates you have for independent contractors. 

Invest in Payroll Software 

Don’t exhaust yourself by handling payroll manually. If you have the budget, it would be a good idea to invest in a payroll program. These tools will automate tasks like calculating wages, tax deductions, and generating payslips. They reduce the risk of human errors while speeding the entire process up — saving you and your payroll team precious time. 

Should You Consider Outsourcing Your Payroll? 

If managing payroll is getting in the way of your day-to-day operations, then it’s definitely time to consider outsourcing to a payroll service provider in Thailand. 

Here are a few more benefits of doing so: 

• You only pay for the services you hired them for, saving your business more money than if you hired an in-house team and bought software and office equipment. 

• These payroll specialists generally know more about Thai payroll requirements than the average entrepreneur, so they can guarantee better compliance than if you keep handling matters yourself. 

• Many payroll outsourcing services can scale with your business when needed, which can be quite beneficial when you plan to expand in the near future or if you have to reduce your staffing. 

Proper Payroll Management Can Drive Your Success

If you want to have a thriving SME in Thailand, then you need to manage your payroll well. Not only will it keep you compliant with Thai laws, but it also builds trust and loyalty with your employees. They’re willing to work harder for you if you can show that you will take good care of them. 

So go ahead and take a step towards a better business by improving the way you handle payroll. Should you ever get overwhelmed, just remember that there are local payroll specialists who can put things back in order.