How to prepare for pay roll year end

Preparing for the year-end payroll

If you own a business, you know that preparing for year-end payroll is an importance aspect  for the tax year, that’s why we developed a reliable payroll checklist to ensure the efficiency of your payroll roll out. Here’s what you need to know.

What is payroll

Payroll refers to the compensation a company awards their employees for their work done. This includes salaries, wages, benefits, and overtime. It’s often one of the largest payments a company has.

Keeping an accurate record and ensuring payroll is operating smoothly is of utmost importance, as it does come with problems if not done with accuracy. If a business isn’t compliant with the tax laws and regulations, it can lose money to fees and regulatory costs. For this reason, companies often use a third-party payroll service to handle payroll matters. 

What you need to know

If you received income that is taxable do you need to submit a tax return to the South African Revenue Services (SARS)? For normal taxpayers, under the age of 65, this is when your employment income exceeds R87,300. If you are older than 65 it is when your employment income exceeds R135,150 and if you are older than 75 it is when your employment income exceeds R151,100.

To prevent any administrative penalties for late submission, it is vital to submit the 2022 tax return within the proper filing period noted by SARS. They are known for being particularly strict in the application of their notice with penalty amounts ranging between R250 and R16,000 per month.

Important Tax Year-End dates to note:

28 February 2023 – The last day of the Tax-Year

1 March 2023 – New Tax-Year starts

31 May 2023 – Deadline for annual employer reconciliation submissions

31 October 2023 – Deadline for mid-year employer reconciliation submissions

Year-end payroll checklist

There is a three-step information verification process to go through and understand before submitting your payroll data.

Step 1: Verify your:

  • PAYE registration number
  • UIF reference number
  • SDL reference number
  • Company information

Step 2: Ensure your employees’ information is correct. including their:

  • Names
  • ID / passport number
  • Bank account number
  • Income tax reference number
  • Address and phone numbers
  • Directive numbers

Step 3: Check your remuneration data by:

  • Verifying your employees’ earnings, deductions, and employer contributions.
  • Ensuring you have processed the above using the correct IRP5 codes.
  • Using the Medical Aid billing statement to ensure that Medical Aid Dependants were reflected correctly throughout the tax year.

All staff who worked for the company on the last day of the financial year, 28 February 2023, must get an IRP5 document. This document summarises their pay and deductions for the year. 

Process your payroll:

Step 1: Reconcile your PAYE, UIF, SDL and ETI values.

Step 2: Create a CSV file from your payroll and import it into e@syFile Employer.

Complete your year-end and make the final submission for the 2022/23 tax year.

This time of year is extremely busy for businesses, and outsourcing payroll can only work to your advantage. It streamlines the process making it more accurate and saves time. For full payroll function and administration get in touch with The Acumen Group.