Financial software: Helping your small business calculate, complete and submit your monthly tax returns

The type of business entity you choose decides the type of legal and tax implications you will face. However, when it comes to monthly tax accounting, every employer must ensure that they abide by the SARS monthly tax requirements.

Monthly taxes need to be calculated, completed and submitted on a timely basis to ensure you don’t incur late penalties. A big advantage of financial software is its ability to make the payroll tax process an easy, efficient and most importantly, accurate monthly process.

It’s important to remember that if you want to use financial software, (whether its just payroll tax software or comprehensive accounting software solutions), to calculate and complete your monthly tax deductions, you must apply to the Commissioner’s office in Pretoria.

Monthly Tax: Getting started

The first step for employers is to register for the respective monthly taxes and levies (SITE/PAYE/UIF/SDL). You will then have to deduct the appropriate tax off your employees’ salaries every month, and finally send them to SARS. You can calculate payroll tax manually or by using payroll software.

To register your business for tax:

  • Fill in a form called an IRP101 (information required will include the name of your business, number of employees and business address)
  • Comply with additional information when requested by SARS
  • You will receive: 1) a card stating which Revenue office your business is registered with, including the telephone number and address of that office. 2) A book of accounting tax tables, clearly stating how much tax must be taken from each employee’s salary.

Submission of monthly tax

When you pay your employees you need to deduct the relevant tax from their wages.

You must:

  • Add up all the tax you’ve deducted from each of your employee’s wages and write it on an EMP201 form
  • Write out a cheque for the tax amount, (made out to the SARS)
  • Send or take both the complete EMP201 form and the cheque to the Receiver of Revenue.
  • The Receiver will send you a receipt which you are obliged to file.
  • Alternatively you can make a bank deposit. In this case, you will not receive a receipt; the stamped deposit slip will act as a receipt.

It’s important to note: SARS must receive the form and the cheque by the 7th of the following month (e.g. Tax deductions for January must reach SARS by the 7th of February). If your submission is late, YOU WILL be fined by the Receiver.

Monthly taxes – what they are and what they mean

SITE – Standard Income Tax on Employees

Employers must calculate the amount of each employee’s tax that represents SITE. It is the responsibility of the employer to recover any short fall of SITE and pay it to the Receiver; refund of SITE overpayments must be made by the employer to the employee; you may then deduct this from your next payment to the Receiver.

PAYE – Pay as You Earn

PAYE is collected on behalf of the employer for the receiver. It is tax that is automatically deducted from wages and is essentially a provisional payment. PAYE is calculated and deducted from net remuneration. Net remuneration is calculated as: gross remuneration (these include wages, overtime, leave pay etc.) plus fringe benefits, less allowable deductions (pension fund, retirement annuities).

UIF – Unemployment Insurance Fund

UIF provides for illness, maternity and unemployment benefits. It is compulsory for all staff to pay UIF. As an employer you must register for UIF with SARS and make UIF contributions for each employee (make sure to check the employee exceptions list). The UIF contribution is 2% of the staff member’s earnings (1% of which is paid by the employer and 1% by the staff member).

SDL- Skills Development Levy

SDL is a compulsory levy whose purpose is to fund education and training as outlined by the Skills Development Act of 1998. SDL is payable by employers and is calculated as a 1% levy of the employee’s total remuneration.

Easing the tax form burden with Accounting Software

Payroll accounting software can substantially decrease the amount of time and irregularities that go into manual payroll bookkeeping. QuickBooks accounting software is easy to use and carefully constructed to keep you current on payroll tax requirements.

Streamline your monthly tax process from a cumbersome manual effort to a simple, up-to-date, and accurate accounting system. Payroll tax is a necessity but it doesn’t have to be a chore. Contact us today for effective business software solutions to your monthly tax submissions.