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8 Things you should know about Payroll in South Africa to avoid penalties

Here’s how to avoid penalties at SARS and the Department of Labour – by not making these 8 common mistakes most entrepreneurs make when it comes to payroll in South Africa…

payroll in south africa

Payroll in South Africa is not as simple as it seems.

There’s a long list of requirements and submissions that your company needs to comply with to avoid penalties from both SARS and the Department of Labour.

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 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.

payroll in south africa

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.

Our team of experts created a list of the 8 crucial things every entrepreneur should know about Payroll in South Africa to avoid penalties:

  1. Employers should be registered at SARS – AND the Department Labour

SARS is not the only place you should be registered as an employer.

Every South African employer should be registered as an employer at both SARS (for PAYE, UIF, and SDL) and the Department of Labour (for UIF).

  1. You have to submit your monthly returns at both SARS – AND the Department Labour

Just as people often neglect their employer registration at the Department of Labour, they also neglect their paperwork submissions to the Department of Labour.

Your monthly returns must be submitted to both SARS and the Department of Labour.

  1. There’s a cap on how much UIF you must pay

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.

  1. 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.

  1. 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.

  1. 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.

  1. If you don’t calculate your tax correctly your employees might be paying too much

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.

  1. You don’t have to do everything yourself

Keeping track of all your Payroll requirements can be complicated.

Simply sign up for Company Partners’s Payroll services. Their team of Payroll experts will handle everything for you starting from only R99.00 per month.

Company Partners will keep track of all your required annual, bi-annual and monthly submissions to both SARS and the Department of Labour.

payroll in south africa

Besides handling your payroll process and your payroll administration – ensuring that you comply with all the numerous requirements throughout the year – Company Partners 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.

A training platform for entrepreneurs

The one thing that nobody can take away from you is knowledge and as we all know, knowledge is power. In South Africa, not everybody has access to the funds needed to pay for further education and training. In the past, this had to effect that a lot of great ideas and potential entrepreneurs did not see the light.

Training

 

Luckily, there are a few organizations in South Arica that provides free training to entrepreneurs. This is done to ensure that these entrepreneurs are equipped with the essential skills to successfully start and run their own businesses.

One of these organizations is The Seed Academy. The Seed Academy provides practical training for entrepreneurs. The best thing about this Academy, is that the training is provided by real entrepreneurs. This enables the Academy to provide the best possible training by having real life experience in entrepreneurship.

They are aimed at providing assistance and training to entrepreneurs from the very start. They take the trainee entrepreneurs through all the steps, from finding the idea right through to the realization of the idea. Everything that needs to happen in between these two milestones is covered.

The Academy has recently announced that they are in possession of R2,4 million of sponsored training that they will be making available to entrepreneurs. This will mean that a number of potential entrepreneurs will have the chance to better their skills and that they will be able to open and run a business successfully.

At the moment, the Seed Academy offers four courses for entrepreneurs. These courses include basic training, marketing and financial training, as well as a course that is aimed at educating the trainees on the key aspects of building a successful business. The only downfall to this training is that it is only presented in Johannesburg and in Cape Town.

These courses are all structured in such a way that it incorporates personal and leadership development. Developing these elements into the courses will give the entrepreneurs a solid foundation to build their new business on.

The course also includes practical sessions where the entrepreneurs will be actively involved. The Academy determined that when they make use of practical lessons, what the entrepreneurs learn more from the experience in relation to only reading all the information. These practical sessions are presented once a week over the span of 10 weeks from 18:00 till 21:00.

The Seed Academy has also made it easy to apply for admission. You can log onto their website and go to the ‘Apply Now’ link, where you will be asked to complete a short form with your details. All you then need to do is to submit your application.

The best thing about these courses is that you do not need a certain qualification or achievement behind your name in order to enroll for these courses. All that you need is a brilliant idea and an entrepreneurial spirit. When you have these two, and completed the training, nothing will be able to stop you.

If you would like to get into contact with the Seed Academy, you can do so by logging onto their website at www.seedacademy.co.za, you can drop them an email at info@seedacademy.co.za or you can give them a call at 011 262 6858.

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Why register a 2015 Pty?

CIPC is allowing the Last 2015 Pty Registrations

In South Africa’s economy the registration number of your Company is a massive factor of TRUST. When applying for contracts and Tenders, the number with which your Company’s Registration Number starts indicates how long your Company has been active.  For example, Company Partners was registered in 2006 (Reg Nr 2006/087669/23), but only started trading in 2007. As we had a 2006 Registration Number our clients could see that we’ve been active for more than a year – which won over their TRUST.

What does this mean for me?

IF you want to start a Company next year (2016) it would be in your favor to register a Pty Company at CIPC in the next two WEEKS – as CIPC will give your Company a 2015 Registration Number. Apply now for a FULL Pty with a new name; or start at only R250 through our Payment Plan option.

As a Christmas Gift, we are giving ALL clients who register a new Pty Company during the holiday season a FREE Database Listing valued @ R299 where you can reach 100’s of clients (the order needs to be placed and paid for before 11 December 2015. Read more about the database listing. 

Click the button below to Apply for your own 2015 Pty Company with a new name @ only R895:

Register a Company