How to get your business ready for Tax Year-End

A new year is typically a stressful start for many small to medium-sized enterprises (SMEs) that are already feeling the hot breath of the Tax Year-End (TYE) on their necks.  

To remain compliant, business owners (or their payroll and HR function, if they have one) must stay up to date on how legislative changes impact their TYE processes. 

It’s not easy.

In fact, in the Payroll and HR in SA: Rising to the challenges of change report by Sage, 77% of respondents say they battle to grasp complex payroll taxes, and 50% struggle to explain tax calculations to their employees. 

Time is already in short supply for many SME owners as they juggle multiple roles from payroll and HR to being the in-house barista.

The need to keep up with regulations means more hours checking and double-checking PAYE, UIF, medical aid, and pension fund figures – to name just a few.

This leaves little to no time to pursue business benefits such as Employment Tax Incentives (ETIs) and the Skills Development Levy, which help lower hiring costs through reduced PAYE contributions.  

Only 52% of SMEs currently take advantage of ETIs.

Throw in the global shift to remote and hybrid working, the increased need for data security, and the penalties for incorrect payroll taxes, and complying with TYE can seem like an impossible task. 

Fear not.

In this article, we highlight four tips that will help you protect your business from costly fines and possible litigation – and sail you through this year’s Tax Year-End.  

Here’s what we cover:

• 1. Consider outsourcing
• 2. Keep employees engaged and informed
• 3. Adopt a self-service platform for employees
• 4. Implement automation
• Don’t wait for Tax Year-End

1. Consider outsourcing

Understandably, outsourcing payroll is not always viable for a cash-conscious small business.

Nonetheless, if you don’t have an accountant or payroll expert in-house, it’s well worth looking into the cost of an outsourced payroll vendor. 

Consider the following benefits of having such a resource on your team: 

• Keeping employee records up to date 
• Submitting tax remits  
• Filing tax returns 
• Processing payroll in line with current legislation 
• Identifying discrepancies  
• Providing advice (like how to sign up for ETIs). 

With remote and hybrid working on the cards, there are added layers of time-consuming complexity for payroll and HR practitioners.

The Sage Payroll & HR research backs this up, with 83% of respondents saying they spend most of their time dealing with manual tasks, such as repetitive administration and employee data maintenance.  

Chances are you’ll realise that not having an outsourced payroll function is costing your business more. 

2. Keep employees engaged and informed

Ensuring payroll compliance is primarily – but not solely – your responsibility.

Your employees have an essential part to play in helping your business stay compliant with current legislation. 

For example, they need to follow your company’s expense policy to the letter and keep accurate records of their time and expenses.

It’s the kind of administrative stuff that easily slips off people’s radars, so be sure to walk your employees through what’s required of them and provide regular refresher training. 

If you don’t have a comprehensive policy to guide your employees on all practices that affect their pay, now is the time to put one together.

Not only will it help keep your company compliant, it will also provide a helpful resource for employees who wish to know more about additions to and deductions from their earnings. 

Remember to double-check your payroll data before you submit your year-end tax return.

Ensure your employees’ full names are spelled correctly and that their ID or passport numbers and mailing addresses are correct.

It’s easy for typos to creep in when employee information is inputted manually, which can cause all sorts of problems down the line. 

3. Adopt a self-service platform for employees 

Checking and double-checking employee data is time-consuming.

So why not set up a self-service platform for employees to do it themselves? 

It’s a fully transparent and easy way to ensure that all your personnel data is accurate. Employees also benefit as they’re able to track their personal information, including sick leave, holiday requests, and timesheets, from anywhere at any time.

You can also upload important company information to the self-service platform, such as policy updates to keep your employees up to speed. 

Self-service HR and payroll is an all-round winner because it saves you and your payroll team time to focus on other crucial tasks.

In fact, 56% of respondents say that digitalising payroll and HR data could save them a ton of valuable time and effort.

4. Implement automation  

Cloud-based, automated HR and payroll software is a game-changer.

Built from the ground up for specific business needs, it eliminates errors from manual data entry, syncs with local legislation, and updates in line with changing regulatory requirements.  

 In addition to helping your business stay up to date on legislation, automation also: 

• Keeps your business prepared for an audit
• Classifies employees and contractors correctly
• Ensures on-time payments. 

All the above impacts your tax return, which makes them priority areas to address.

Simply put, bolstering your business with automated software will make it even harder to make mistakes with payroll that could affect your compliance.  

Upping the ante even more, 96% of respondents agree that automated payroll and HR systems should be integrated with accounting software to enhance accuracy and compliance even further. 

Don’t wait for Tax Year-End

There is no need to spend the beginning of every year stressed to the hilt as you wade through your employee and payroll data to submit on time.

The goal for any SME owner is to prep for Tax Year-End all year-round.

Enlisting the support of cloud-based HR and payroll software does this automatically and enables seamless integration with your accounting systems.  

With year-end tax tasks simplified and taken care of, you can lift your head and focus on the things that aren’t so simple – such as the human aspect.

It takes time and effort to attract, engage, and retain the best talent to drive your business’s growth. 

One thing’s for sure: a company that doesn’t make mistakes with employee data or fall short on legislative compliance is an attractive place to work.