Payroll in South Africa is not processed the same as other countries. Each country is unique in their payroll systems, processes, deductions, and laws.
There’s a long list of requirements and submissions that a business must comply with in order to avoid penalties. Sadly, these penalties come from both SARS and the Department of Labour.
Some business owners believe that having a professional payroll process is only necessary if you employ multiple people. This is not the case at all. In fact, it is this very belief that gets business owners into trouble with SARS as they do not submit or pay the necessary fees. Even if you are a one man show at your own company, the legislation in terms of payroll in South Africa applies to you as well.
All Registered Businesses in South Africa Should Comply With PAYE, SDL and UIF Requirements.
We have put a list of FAQ revolving Payroll that we believe will be beneficial to you and your business:
Is PAYE and Income Tax the Same Thing?
No. PAYE is the name of the method of collecting income tax that applies to your earnings. Employees earnings are taxed directly from their pay. This is PAYE.
An employer is responsible for deducting and paying PAYE income tax on the employees’ behalf.
How Do You Do Payroll?
Payroll can be simplified by saying it is a list of employee payments. However, it also includes tax deductions, payment dates and more.
Additionally, the employer must offer their employees payslips each month. This must be part of your business payroll service.
Payroll also includes the calculation and the payment of PAYE and other contributions. Therefore, PAYE tax needs to be accurately deducted.
This is payroll simplified.
What Is The Best Way To Run Your Payroll?
There are a few ways you can do your payroll. You can either outsource payroll to a specialist, run it by hand, or use a specialized payroll software.
Outsourcing payroll to a specialists is the most expensive, least time-consuming method while learning how to do it yourself by hand is the least expensive but most time consuming.
What Is UIF?
UIF stands for Unemployment Insurance Fund. It provides short-term relief to employees and employers who may become unemployed or can no longer work. All employees, as well as their employers must contribute to UIF.
The UIF contribution that employers must deduct from employees is 1% of their total earnings, excluding commission.
Can I Pay Employees By Cash?
Yes, it is not illegal. However, you might come under scrutiny if you do. Paying employees cash is associated with avoiding taxes and deductions. Therefore, we don’t advise it.
If you pay employees in cash, take out taxes and deductions before giving them their nett salay/wage. Additionally, keep accurate records and submit to your accountant and/or payroll provider immediately.
Contact Our Payroll Specialists in South Africa
Our team at Outsourcing Solutions not only handle your payroll processing and payroll administration. Additionally, we ensure your business is compliant with all South African laws, taxes and requirements. Furthermore, we:
- Record employee lave (sick leave, annual leave, family leave etc.)
- Automatically incorporate all legal revisions in your payroll system.
- Provide payroll back ups.
- SARS – EMP 201 submissions
- Prepare electronic tax certificates
- Employee payslips
- IRP 5 and IT3 certificates
- UIF Declaration and file submission
- Tax Directives
- Advice on PAYE matters
Let’s chat today and we will assist you with any questions or queries you have regarding payroll in South Africa.