Payroll Cycle in Singapore 2025: Key Compliance and Best Practices for Small Businesses

Managing payroll effectively is crucial for small businesses in Singapore. Timely and accurate salary payments keep employees motivated and ensure compliance with local regulations. As we move into 2025, understanding Singapore’s payroll cycle will be essential for smooth operations and long-term success.

Whether managing a small team or scaling up, here’s what you need to know about payroll cycles, key components, and compliance requirements to keep your business on track.

1. Choosing the Right Payroll Cycle

The payroll cycle refers to the period between salary payments and the administrative tasks involved in payroll processing. While it may seem straightforward, selecting the right cycle depends on your business needs and industry norms.

• Monthly Payroll Cycle: The most common option in Singapore, where salaries are paid at the end of the month, usually on the last working day.
• Fortnightly or Weekly Payroll Cycle: More common in industries like retail and hospitality, offering employees more frequent payouts for better cash flow management.

Legal Requirement: Salary Payment Deadlines

Under the Employment Act, employers must pay salaries within seven days after the payroll cycle ends. Delays can lead to penalties, making timely processing a top priority.

2. Key Payroll Components Every Business Should Know

Payroll involves more than just salary payments—it includes multiple financial and compliance-related elements. Here are the key components:

• Basic Salary: The fixed amount agreed upon in the employment contract.
• Overtime Wages: Applicable to employees covered under the Employment Act, with strict guidelines for calculation.
• Mandatory Deductions: Includes CPF (Central Provident Fund), Self-Help Group (SHG) contributions, and the Skills Development Levy (SDL), all of which must be deducted correctly.
• Tax Obligations: Proper tax reporting is essential, including IR21 tax clearance for foreign employees leaving Singapore, to avoid penalties.

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3. Payroll Compliance and Legal Requirements in 2025

Staying compliant with payroll regulations is crucial to avoid fines and operational disruptions. Here’s what small business owners must focus on:

CPF Contributions

• Employers must make CPF contributions for employees earning more than SGD 50 per month. Contribution rates vary based on age and salary level, with periodic updates from the CPF Board. Keeping up with these changes is crucial for compliance.

Skills Development Levy (SDL)

• All employers must pay the SDL, which is calculated at 0.25% of an employee’s gross monthly salary. The minimum payment is SGD 2, and the maximum is SGD 11.25 per employee per month. Accurate calculation and timely payment are essential to avoid penalties.

Tax Filing and Employer Obligations

• AIS Submission: Employers participating in the Auto-Inclusion Scheme (AIS) must submit employees’ income details electronically to IRAS by 1 March 2025.
• Form IR21: If an employee is permanently leaving Singapore, employers must file Form IR21 at least one month before their departure.

4. Optimising Payroll Cycle Management

To enhance payroll efficiency and compliance, consider these best practices:

• Leverage Payroll Automation: Digital payroll systems can streamline calculations, CPF contributions, and tax filings while reducing manual errors.
• Maintain Detailed Records: Keep payroll documentation, including payslips and tax filings, for at least five years to meet regulatory requirements.
• Stay Updated on Regulatory Change: Regularly check updates from MOM, CPF Board, and IRAS to ensure compliance with new laws.
• Secure Payroll Data: Protect employee payroll information using encryption, secure systems, and restricted access to prevent data breaches.

Summary

Managing payroll in Singapore requires more than just salary disbursement—it demands compliance, accuracy, and efficiency. By selecting the right payroll cycle, ensuring proper tax and CPF contributions, and leveraging automation, small businesses can streamline operations and remain compliant with 2025 regulations.

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Don’t let payroll complexity slow you down. Our team handles everything—from employee payments to tax deposits and filings. We manage compliance deadlines, calculate withholdings, and ensure timely payments. Plus, your payroll seamlessly syncs with your books.

Unlike firms that outsource to third-party providers, we handle your payroll in-house. Get expert support and direct access to your Customer Success Manager via SMS for any questions.

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How Small Businesses in Singapore Can Open an Airwallex Account for International Payments

How Small Businesses in Singapore Can Open an Account in Wise Bank for International Payments

Why Accuracy and Timeliness Matter in Payroll