South Africa is a notoriously friendly place to do business. However, the country also has strong worker protections and strict employment laws that can make expanding a challenge. You’ll need to follow all of the country’s labor laws when setting up your South Africa payroll.
Instead of worrying over the details, Globalization Partners can simplify the process. We will hire employees to work for your company through our South Africa PEO. Then we will add those employees to our already-compliant payroll, so you’ll only need to focus on running your company.
Taxation Rules in South Africa
South Africa’s taxation rules vary based on whether you employ foreign nationals or South Africans. The country taxes residents on their worldwide income, while they tax non-residents only on income earned in South Africa. As an employer, you’ll need to file with the South African Revenue Service (SARS) for two different taxes — Standard Income Tax on Employees (SITE) and Pay As You Earn (PAYE).
The corporate income tax rate in South Africa is 28%, while the personal income tax rate varies based on how much a worker makes each year. Employers must make individual income tax for employees a primary concern to stay compliant.
South Africa Payroll Options for Companies
Every company is different in its primary functions and how it runs day-to-day operations. The four main South Africa payroll options are meant to provide a solution for every kind of company — whether you want to handle payroll yourself or outsource it. These choices include:
- Remote: In a remote payroll situation, you can add your South African employees to the parent company’s payroll. This option allows you to operate one payroll, but you’ll have to carefully follow separate employment laws.
- Internal: Larger companies that are committed to staying in South Africa may hire additional staff and set up payroll at their South African subsidiary. However, this option is more expensive and time-consuming.
- South Africa payroll processing company: A payroll processing company based in South Africa can take the hassle out of setting up your own payroll. However, you will still be held liable for issues of compliance.
- Outsourcing with Globalization Partners: The most convenient South Africa payroll option is outsourcing with Globalization Partners. We will handle your payroll on your behalf and take on all risks of compliance as well.
How to Set Up a Payroll in South Africa
Companies expanding to South Africa will need to spend a good bit of time setting up their South Africa payroll. The entire process can take anywhere from two to six months. Foreign nationals will need at least 2.5 million ZAR to invest in the business. They will then need to register for a variety of taxes and file with the registrar’s office.
Before you hire employees, the law requires you to draft a written employment contract that includes certain entitlement and termination terms. Employers need to give employees notice of termination, which ranges anywhere from one week to four weeks depending on the employee’s time of service. Severance pay is also required based on the reason for termination.
Payroll Processing Company in South Africa
When you need South Africa payroll outsourcing services, turn to Globalization Partners. Contact us today to learn more.