Sage Reports On How Payroll Compliance Is To Come Under ScrutinyExpect the South African Revenue Service (SARS) to clamp down on non-compliant business and personal taxpayers as government struggles to fill a large budget deficit.

Ensure that your payroll is fully compliant with the laws and regulations around collection of PAYE, as government looks to plug revenue holes.

While you may have previously gotten away with non-compliance, whether unwittingly or otherwise, the law is tightening around payroll compliance and you need to be prepared. Government is focused on acquiring funding for infrastructure investment and social spending, but what does this mean for your business?

Tax compliance ruled with a firmer hand

Accounting for more than a third of tax revenue, personal income tax is the single largest contributor to fiscal revenue. SARS has done a good job over the years of bringing employers into the tax net and catching those that don't comply with the tax regulations and legislation.

Those few companies that are not in full compliance can expect to see the tax authority take an even more robust approach to enforcing compliance.

Timely and accurate submissions keep you in the clear

To remain compliant, businesses must ensure that they register all employees for tax, declare the correct earnings for all employees and include correct calculations of other earnings, deductions (such as PAYE and UIF), and contributions (such as retirement funding or UIF contributions) in their payroll. They must also make sure that annual returns are filed and submitted promptly and accurately.

The risks of getting it wrong include:

• Censure
• Interest or fines by authorities (SARS, department of labour, a labour court etc.)
• Imprisonment in cases of fraud or extreme negligence.

What's more, compliance is complicated by annual changes in payroll legislative requirements.

Automation solves compliance challenges

Because compliance is complex and the risks of non-compliance are high, even smaller South African businesses can no longer rely on spreadsheets and other manual methods to do their payroll calculations and file returns.

Automated solutions are becoming more essential for keeping reliable records and performing accurate payroll calculations.

Payroll automation software — with solutions available for businesses from start-ups to medium-sized companies and larger enterprises — takes care of calculating the complex formulas for the various deductions, generating compliance reports, and keeping accurate records.

That makes it easier to perform accurate calculations, file submissions on time and generate reports and electronic payslips.

Eliminate manual paperwork

Payroll software takes the pain out of compliance, allowing you to focus your energy on strategy, customers, and employee engagement rather than on red-tape.

While mistakes in record keeping and compliance can result in punitive penalties and hurt the company's brand, an efficient payroll system enhances staff morale, helps to reduce the risks of fraud, and boosts an organisation's reputation.

It is a worthwhile investment in the business and a foundational element of good governance and sound financial control.