Payroll companies provide their clients with a variety of services related to your business’s payroll needs. This includes processing employee hours, cutting checks, directly depositing funds, and ensuring that your employees are paid correctly and on time, every time.
Payroll Services In South Africa
Our offices in Cape Town and Johannesburg can assist with all your HR & Payroll administration. Are you a small business without a dedicated Payroll department? Perhaps you are a large multinational corporation needing Payroll services for a South African branch of your company? Maybe your company would simply like to mitigate the risk involved with internal Payroll and administration, by outsourcing your Payroll and accounting needs to an independent third party, such as TMF South Africa. Your company can focus on its core business while we ensure accurate Payroll and accounting records are maintained and are compliant with SARS and the South African Department of Labour.
South African Payroll services are governed by three main laws:
Income Tax Act
The government’s main source of revenue is the tax levied on all taxpayers’ income (companies, trusts and individuals). The period of assessment is 12 months commencing on 1 March and ending on 28/29 February. There are three main methods for paying tax on monthly income:
PAYE (Pay-As-You-Earn) ensures that an individuals’ tax liability is collected at the same time the income is earned.
Provisional Tax allows taxpayers who earn income in addition to a salary to pay the tax on their additional income halfway through the financial year and again at the financial year-end.
Unemployment Insurance Fund (UIF) Amended Act
The Unemployment Insurance Fund serves to alleviate the social and economic strain caused by unemployment. According to the act, both employer and employee must register for UIF and make monthly contributions to the fund. This applies to all employees except those working less than 24 hours per month for an employer, learners, public servants, foreigners working on contract, any employees who receive a monthly state pension or employees earning commission. The act states that employer and employee must each pay the equivalent of 1% of the employee’s salary to the fund each month.
Skills Development Levies (SDL)
An employer is obliged register as a skills development levy payer when cumulative salaries are expected to be over R500,000 for the year. This levy is paid to the National Skills fund and is used to enrich and develop skills of employees. According to the act, employers must pay 1% of the total amount paid in salaries on a monthly basis to the South African Revenue Service (SARS).
Our team of professional accountants can manage the full scope of payroll processing including:
Registrations
On-going compliance
Electronic payslips
Annual leave calculations
Employees tax calculations (PAYE)
Monthly UIF and SDL calculations
Workman’s Compensation (WCA)
Reconciliations
Paying agent
How does payroll work in South Africa?
South African employers withhold taxes owed from a non-provisional employee’s paycheck on a monthly basis using South Africa’s PAYE system. While there is no payroll tax in South Africa, there is a withholding tax.
What is the minimum wage to pay tax in South Africa?
R83 100 if you are younger than 65 years. If you are 65 years of age to below 75 years, the tax threshold (i.e. the amount above which income tax becomes payable) is R128 650. For taxpayers aged 75 years and older, this threshold is R143 850.
How much do clients charge for payroll services in South Africa?
While the general rule of thumb is that it will cost around R 2312.24-R 3853.74 per employee per year, your total price will be based on the scope of your engagement with your vendor. This is a relatively small price to pay compared to the risks of doing it yourself like errors, late payments, or compliance issues.
Do accountants handle payroll in South Africa?
At tax and payroll service companies, accountants work with organizations to process tax and payroll documents. With the government, they find work as budget analysts or auditors, ensuring the compliance of outside organizations.