Payroll is critical part of a business. It involves the process of paying salaries and the payments that involved with them. IF not done – no one gets paid and the deductions are not paid to SARS.
What is your most important asset?
It may surprise you but the answer is:
YOU AND YOUR STAFF
You can have all the assets. The best offices, great branding and social exposure. You would be on the way to success except you do not have the people to work these assets. The people in the best offices answering the phone calls received from the branding and social interaction.
In fact, many employers do not consider their staff as an asset. A staff compliment is often considered an expense – and a big one at that!
More often, employees are rated in importance by the amount of money they can bring into the company. And not what processes they perform that will create the income.
SARS is involved in your payroll
Yes, SARS is always involved in your business. This time it is actually a good interaction.
SARS makes it easy to sort out your payroll compliance. SARS does this by collecting the payroll deductions – PAYE (pay-as-you-earn or ‘tax’), SDL (Skills Development Levy) and UIF (Unemployment Insurance Fund) – from you monthly through one portal. SARS then pay the necessary departments for you! EASY – one payment and all done.
SARS are not out to get you! They are here to help you
The payroll function is the part of your business that calculates the amounts to be paid over to SARS. This used to be a tricky, and sometimes, a gruesome task.
But with the advancement in technology and the computer programs that are now available, it is something that can be done in a fraction of the time.
This process can be simple if it is done correctly! The biggest factor is the accuracy of the employee information. The computer programs go through the (exhaustive) list of numbers, addresses and names needed so that you are sure it all there.
This information is collated and populated into the EMP201 form on e-filing (online portal) and submitted to SARS. The payment is made with the unique reference number that is generated by SARS. That is it from your side.
SARS allocates the amount to the specific return according to the reference number. The SDL and UIF are then paid over on your behalf.
Payroll forms and submission dates
- A summary of all the payroll deductions for all employees for the month
- Payable on the 7th (or last working day before) of the following month
- eg: the March EMP201 will be submitted and paid by the 7th of April (or last working day before)
- A summary of all the EMP201 forms for the year
- Submitted twice a year
- First, for the first half of the year (normally about September*)
- Second, for the complete year (normally about May*)
- This is a vital submission for the employees because it produces the IRP5 for their personal tax. Read more here.
- A summary of an individual employees’ payslips for the tax year (March to February)
- Issued once a year to the employees – this is compulsory
- Is produced by the EMP501 submission
Payroll penalties and interest
This is where SARS gets its bad name or adds to it, depending on how you think of it. Penalties are avoidable if you follow these 8 rules.
- Employers are required to be registered with SARS
- You have to submit your monthly returns with SARS and the Department of Labour
- UIF is limited
- Monthly payroll submission is due by the 7th of the following month or the last working day before
- Your EMP501 is due twice a year
- Employees must receive their IRP5 certificates once a year
- If you are not doing your payroll calculations correctly with the most up to date regulations, your employees may be paying too much or too little!
- You do not have to do everything yourself
Should you make a late submission or do not submit according to these 8 rules you will be liable for penalties and interest. The penalty is 10% of the total due and the interest is 7.25% per month calculated daily.#
Why you should outsource your payroll function
More and more companies are outsourcing their payroll function. With the regulations changing so rapidly, it is advisable to ask a professional to help you. Why?
A specialist payroll company can help you in various ways. It can:
- Compliment your current payroll structure and help you through the process. At BC Accounting Services we do not simply take over, but rather help you
- Run your complete payroll process for you, with your help with the information provided by you
- On top of that we can also help you with:
- Keeping track of annual leave, sick leave, and family responsibility leave
- Providing back-ups of payrolls when needed
- Providing records regarding remuneration in the event of CCMA cases
- Incorporating all legal changes automatically through the payroll software that we use
For more information on our payroll services, read here.
Basic Conditions of Employment
The Basic Conditions of employment Act No75 of 1997 (as amended) (Section 23 (1) of the South African constitution) lays out specific outlines on what the employee is entitled to and how they are to be treated in the workplace.
The Act is specific in various aspects of the workplace and the employees rights as well as the employers rights. The main sections (+) we deal with here are: (click on the headings for more detailed articles about that topic.)
- How much? 15 working days a year
- When? Dependent on company policies
- What types?
- Maternity, etc
- Working times, shifts, weekends differ from the “normal” 5 day working week.
- Notice Periods, administration and victimisation:
- Notice periods:
- how long they must work when resign or get dismissed.
- Can be based on how long they have worked for.
- Administration: these are written particulars:
- A description of the job. Important for performance reviews of employee.
- The hours that the worker will be expected to work. How many hours per week or month
- Ordinary and overtime rates of payment, including payment in kind and its value
- Any deductions to be made. This is statutory or benefits eg: RA
- How much leave the worker will get (as above)
- The notice period (as above)
- The employer is not allowed to victimise any employee for any reason. Although this is common sense to most businesses, not all businesses adhere to this and the employee has rights when and if it does happen.
- Notice periods:
- Payment of employees:
- How much? Must be agreed and legal in terms of the law of the land eg: minimum wage etc
- Any deduction ordered by court.
- Company benefits eg: pension etc
- staff loan repayments
- Employees are entitled to pay for work done
- this payment has to be on time and the correct amount.
The BCEA is available in full in the SA Government website at www.gov.za
* These dates change every year and are subject to change without notice.
# Correct at time of writing, subject to change without notice
+ this is not an exhaustive list. these are what we consider to be the highlights from our experience and must not be read separately from the remaining sections.
This article was updated on the 27th of January 2021
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