Q: I run a small business and have about five employees working for me, i always struggle with the issue of submission especially on the Payroll side.
A: You will always struggle with your Payroll Compliances for as long as proper bookkeeping is not in place.
Especially if deductions has to be made from your staff salaries, deductions such as PAYE and other tax issues on a monthly basis. Such deductions can be those of Deparment of Labour, Medical aid, SARS, Employee allowances, etc.
All this need to be done accordingly and accurately. If you always delay the immediate payments to this departments you are adding to yourself a painful hassles as when the Tax season opens this contributions must be up to date and if not it means that you will need to backdate the monies owed.
Let me just explain the three mentioned above.
1. PAYE
A pay-as-you-earn tax (PAYE) is a withholding tax on income payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. Therefore as the employer you are responsible to register your employees for Tax Returns and the deductions to be made. If for instance you delay the deductions, it will be your fault when the Tax season opens and you have not paid the funds to the Receiver of Revenue then your company will be held reliable and could be concluded as fraud as it is illegal to use the employees PAYE contributions for your company use or witholding it. The money belongs to SARS.
2. The Department of Labour Contributions
Contributions such as Provident and Pension Fund. The main aim of a pension or provident fund is to provide benefits for its members when they retire from employment. The fund also usually pays benefits when a member dies while still working, or is unable to work because of illness, or is retrenched. Once you have registered your employees for Provident or Pension Fund you must make sure on a monthly basis this funds are deducted and allocated accordingly from their salaries to the relevant Governmental Institutions.
3. Medical Expenses
If your company has the medical aid scheme that works with and you offer it to your employees, then this mean you as the employer need to deduct straight from their salaries and pay out to the schemes as their contributions. It is your Company ‘s responsibilities and obliged especially if you have made this compulsory for your employee (s).
If you do not have a good proper bookkeeping system in place you will have te figures messed out and will therefore be difficult to work out your employees contributions,p as all this contributions should show on their payslips.
As much as your employees are not submitting their payslips on a monthly basis to SARS but the deduction summary will reflect on the IRFP5. Therefore that will be the time to reconcile what your Company has been deducting against the employee as equal to what the Company has been paying to this Institutions.
Of course the deductions varies from company to company because it depends on what your Company offers to the employee. Compliance plays an important role in your company and need to be adhered to.
Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Coaching Division
http://www.matsobanemetja.co.za
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Matsobanemetja Business Consulting Pty Ltd 