Payroll in South Africa is not as simple as it seems.
Most South African entrepreneurs think having a rock-solid Payroll process is only necessary when you have multiple employees. That’s not true.
According to South African tax law, all registered companies should comply with annual, bi-annual and monthly PAYE (pay-as-you-earn tax), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levy) requirements.
Even if you’re the only person drawing a salary from your company, the legislation in terms of payroll in South Africa applies to you.
Here are 8 crucial things every entrepreneur should know about Payroll in South Africa to avoid penalties:
Employers are required to be registered with SARS.
Every South African employer is required to be registered as an employer at SARS (for pay as you earn (PAYE), unemployment insurance fund (UIF), and skills development levy (SDL)).
You have to submit your monthly returns with SARS AND the DOL
Your monthly returns must be submitted to SARS. This must be submitted on time to avoid penalties and interest. There can be a mix up when returns are submitted on the last day (ie: at the last minute) To ensure that your return is not late, endeavour to submit the return as early as possible.
All details of the submission must be submitted to the DOL every month too. If you use an electronic payroll system, you can send it straight from your payroll system. You can send it via email to the UIF office or you can use the U-Filing online portal to manually capture the information or upload the .CSV file.
There’s a cap on how much UIF one pays.
As per South African law, you contribute 1% of your employees’ salary as a UIF contribution. You also deduct 1% your employee’s salary as his or her contribution to UIF.
That amounts to a 2% contribution in total.
However, what employers often don’t know there’s a cap of R148.72.
No matter how much your employee earns, the maximum contribution will not exceed R148.72 for your UIF contribution. Your employee’s contribution also has a cap of R148.72.
Monthly PAYE payments are due before the 7th of every month – even if it’s a weekend
There are two monthly deadlines in terms of PAYE.
First, you need to submit your Monthly Employer Declaration (the EMP201 form).
Then you need to pay your PAYE before the 7th of the following month. If the 7th falls on a weekend, you should make the payment before the weekend. This ties in with point 2 above.
You need to submit your Employer Bi-Annual Reconciliation Declaration twice a year
The Employer Bi-Annual Reconciliation Declaration (the EMP501) is due two times a year (due by 31 May and 31 October). You can submit it through SARS’s Easyfile system.
Non submission of this return, you may be liable for a fine of up to 10% of your total Payroll bill. Rread more about this on the SARS website here
Employees’ tax certificates’ are due once a year
You have to prepare your employees’ tax certificates (the IRP5 forms) once every year. This is due by 31 May.
If you don’t calculate your tax correctly your employees might be paying too much (or too little)
Nothing is as damaging to office morale than slicing down your employees’ salaries unnecessarily.
If your tax calculations (on the IT12 returns) aren’t 100% accurate, your employees will pay too much tax, or too little. This will result in employees, either getting a refund or they must pay in when submitting their annual tax return to SARS.
You don’t have to do everything yourself
Keeping track of all your Payroll requirements can be complicated.
Sign up for BC Accounting Services’s Payroll services. Their team of Payroll experts will handle everything for you starting from as little as R99.00 per month.
BC Accounting Services will keep track of all your required annual, bi-annual and monthly submissions to both SARS and the Department of Labour.
Besides handling your payroll process and your payroll administration – ensuring that you comply with all the numerous requirements throughout the year – BC Accounting Services (Pty) Ltd will also do the following:
- Keep track of annual leave, sick leave, and Family Responsibility leave.
- Provide back-ups of payrolls when needed.
- Provide records regarding remuneration in the event of CCMA cases.
- Incorporate all legal changes automatically in the payroll software that we use.
- Provide assistance with any BCEA issues regarding BCEA (Basic Conditions of Employment) requirements.
This post was updated on the 28th May 2020, during the COVID-19 pandemic.
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