Your guide to Our Payroll Maintenance Service
The South African entrepreneurs guide to Payroll Maintenance throughout the year.
Please note this page does not serve as legal or professional accounting advice and it’s important to check for any regulation changes at the relevant authorities.
Although Payroll seems simple, a list of who needs to be paid and when it can be quite complex. As an employer, you need to take into account varying UIF or SDL contributions and PAYE calculations for every employer and you need to adhere to Employer Compliance.
On this page we walk you through 2 services that will simplify the monthly Payroll process, so you can focus on running your business. We will also walk you through 9 frequently asked questions on Payroll, PaySlips, PAYE, UIF and SDL contributions.
First, let’s start with 2 services that can help you simplify the Payroll process. If you have a particular question, simply scroll down for our Payroll FAQs.
Our Two Payroll Maintenance Plans
A Payroll Plan for one Employee
This plan includes:
● PAYE/UIF/SDL calculations for one employee
● Electronic Payslips for one employee
A Payroll Plan for two Employees
Only R199 per month
This plan includes:
● PAYE/UIF/SDL calculations for two employee● Electronic Payslips for one employee
What is Payroll?
The term payroll originates from the 1800s when employers would use a simple paper roll to list the employees, they needed to pay monthly wages to. Today, the term is used when referring to the procedures a company follows to ensure a worker has been fully enumerated.
This includes various processes that all relate to remuneration: the collection of specific employee data, the calculation of wages, and the deduction of PAYE tax with special regard to any tax-deductible payment employees have, for example, medical aid contributions.
Can you do your own Payroll?
Yes, it is possible. However, we advise that you get formal training before attempting to do so.
Is Payroll compulsory?
Usually, if you have employees, payroll is compulsory and make things easier and structured. While it may seem like a relatively simple task, you may be surprised how difficult this process becomes once your business takes off.
Yes, payroll helps you innumerate your employees accurately and on time, but it also helps you ensure that your business is compliant with employer requirements. If you do not do your business’s Payroll, or if you do it inaccurately, your business may face compliance or tax issues in the future.
How do you do Payroll?
Superficially a Payroll seems like a simple list of all your employees and what you owe them according to their contracts with you.
However, what many business owners neglect is the relational function of Payroll. Payroll helps your employees pay their rent and their bills on time because it ensures you pay your employees accurately and on time.
So, in short, although Payroll can be summarized as a list of employee payments, it also includes payment dates and taxation deductions. Whoever manages your Payroll also needs to communicate this information accurately every month to both employees and the financial managers.
Additionally, according to legislation employers need to offer their employees legally complaint Payslips, every month. This process should be included in your business’s Payroll process.
Furthermore, Payroll includes the calculation and the payment of pay-as-you-earn (PAYE) tax and other contributions. PAYE tax needs to be accurately deducted from your employee’s income. Mistakes can cost both employers and employees dearly.
What is PAYE?
PAYE is an acronym for pay-as-you-earn. Deducting and paying PAYE Tax to SARS is part of the Payroll process.
PAYE tax is a form of income tax which an employer pays on behalf of its employees. This is why an employee only receives his or her income after PAYE taxes have been deducted. The employer withholds this tax and pays it directly to SARS.
Why should employers withhold and pay tax on behalf of employees?
It’s a plan devised by the Government to alleviate tax administration burdens from the general population. It also reduces the financial impact of paying tax, because it’s withheld monthly as opposed to being due in lump sums, as with businesses.
Although the tax cut comes from the employee’s pocket, the employer takes on the administrative responsibility to alleviate excessive paperwork for multiple employees. Business owners are already accustomed to tax proceedings.
Consequently, employees are simply responsible for submitting IRP5-forms for their personal tax submissions. These IRP5-forms are issued by employers as proof of the tax payments the employee has already made indirectly (because the employer withheld PAYE tax).
Is PAYE compulsory?
According to South African law, all trading companies should be registered for PAYE tax. So yes, it’s compulsory. It’s important to make sure you are registered.
What is UIF?
UIF is short for the Unemployment Insurance Fund. This fund was initiated by the Government in the 1940s. The goal of the fund is to help individuals who lose their jobs, those who require maternity leave or those who are unable to work for specific reasons, for example, illness. This Fund is designed to alleviate the financial stress when losing your income source.
UIF contributions are made both by employers and employees in equal parts. The amount is determined as a percentage of the employee’s income – the percentage is usually relatively low.
Is UIF compulsory?
Yes. To legally trade in South Africa, an employer has to register with the UIF and usually most employees, even contracted employees, qualify for UIF. Employers must be compliant with the UIF.
What is SDL?
SDL is another acronym from SARS which refers to Skills Development Levy. This levy is imposed to encourage continuous learning and the continuous development of employees. This levy is determined by the amount paid to the employee as their salary.
It is usually calculated at 1% of total wages (taking into account overtime payments, leave pay, bonuses, commissions and lump sum payments) and it is payable by employers.
Is SDL compulsory?
SDL isn’t always compulsory. It is compulsory when the total amount of all salaries paid by your company to its employees amounts to more than R500 000 over 12 months. If this isn’t the case, it usually isn’t compulsory.