The moment you employ your first person, three separate obligations start. Getting them wrong is expensive and personal liability can follow.
The three
| What | Who pays | Purpose |
|---|---|---|
| PAYE | Deducted from the employee | Employee income tax paid monthly |
| UIF | Split between employer and employee | Unemployment insurance |
| SDL | Employer, above a payroll threshold | Skills development levy |
Monthly filing
An EMP201 return is filed and paid by the 7th of the following month. Late payment attracts penalties and interest immediately.
Twice-yearly reconciliation
The EMP501 reconciliation matches what you declared and paid monthly against employee tax certificates. It is submitted in the interim and annual reconciliation periods.
Reconciliation is where errors surface. If your monthly EMP201 figures do not agree with your payroll records, this is when it becomes visible.
IRP5 certificates
Employees need IRP5 certificates to file their own returns. These come from your reconciliation submission. Late or incorrect reconciliation means your staff cannot file.
Deducted PAYE is held on behalf of the employee and SARS. Using it for cash flow is treated seriously, and directors can face personal liability for unpaid employee taxes.
Common mistakes
- Treating someone as an independent contractor when SARS would treat them as an employee
- Not registering as an employer before the first payday
- Missing the 7th because it fell on a weekend
- Monthly declarations that do not reconcile to payroll
- Not issuing IRP5 certificates
Independent contractors
Whether someone is an employee is determined by the substance of the relationship, not by what the contract calls it. If you control how, when and where the work is done, SARS is likely to treat that person as an employee regardless of the paperwork.
Getting this wrong retrospectively means back-paying PAYE, UIF and penalties.
Stop chasing your own numbers
Monthly bookkeeping, VAT and payroll calculations, management reporting and a financial health score. From R1,200 a month.
General information, not tax advice. Thresholds, rates and deadlines change. Confirm current requirements with SARS or a registered tax practitioner before acting.