Payroll guide
EMP201 and EMP501: what payroll software should do for you
Monthly declarations and twice yearly reconciliations are where payroll software earns its money. What to check before a filing season.
Monthly declarations and twice yearly reconciliations are where payroll software either saves you a week or costs you one. What matters is whether the numbers agree without anyone rebuilding them by hand.
What the EMP201 is
The EMP201 is a monthly declaration of the PAYE, UIF and SDL you owe for that payroll month, together with any Employment Tax Incentive you are claiming. It is submitted and paid by the seventh of the following month.
It is a declaration rather than a detailed return. You are telling SARS a total for each category, not listing employees. That simplicity is why the reconciliation later exists.
What the EMP501 reconciliation does
Twice a year, the employer reconciliation ties three things together. The declarations you submitted on your EMP201s, the payments you actually made, and the certificates showing what each employee earned and had deducted.
There is an interim reconciliation covering the first half of the tax year and an annual one covering the full year. If those three sets of figures do not agree, SARS will not accept the submission, and the certificates cannot be issued.
Why reconciliations fail
The most common cause is a correction made in one place and not the other. A payroll is reopened and an employee's pay adjusted after the EMP201 was submitted, and nobody amended the declaration. Twelve months later the totals differ and nobody remembers why.
The second most common cause is an employee record with missing or invalid details. A wrong tax number, a missing identity number or an incomplete address will block a certificate, and you will be chasing that employee in filing season rather than in the quiet month when it happened.
What good payroll software does here
It produces the EMP201 figures directly from the payroll run so the declaration cannot drift from the underlying pay. It generates the reconciliation file in the format SARS expects. And it validates employee records continuously, flagging a missing tax number in March rather than in August.
Ask a vendor to show you the validation report during a demonstration. A product that can list every employee with incomplete details in one click will save you a genuinely miserable fortnight later.
The habit that removes filing season stress
Reconcile monthly. After each EMP201, check that what you declared equals what your payroll produced and equals what you paid. Three numbers, five minutes.
A difference found in the same month is a correction. The same difference found in the annual reconciliation is an investigation across twelve payrolls, usually conducted by somebody who was not there when it happened.
Keep the payment proof with the declaration
SARS reconciles what you declared against what you paid. If a payment was made from the wrong account, allocated to the wrong period, or made in two parts, the reconciliation will not balance even though the payroll was right.
File the payment confirmation alongside the declaration each month. It takes a minute and it is what lets you answer a query with evidence instead of a search through bank statements a year later.
Common questions
01What is the difference between EMP201 and EMP501?
The EMP201 is a monthly declaration of PAYE, UIF and SDL owed. The EMP501 is a reconciliation submitted twice a year that ties those monthly declarations to your actual payments and to the employee tax certificates.
02How often is the EMP501 submitted?
Twice in a tax year. An interim reconciliation covering the first six months and an annual reconciliation covering the full year. SARS announces the filing periods each year.
03What are IRP5 and IT3(a) certificates?
Employee tax certificates produced from the annual reconciliation. An IRP5 is issued where tax was deducted and an IT3(a) where it was not. They feed the employee's own income tax return.
Editorial note
This guide is general buying guidance and not accounting, legal or tax advice. Amounts and deadlines set by SARS change, so confirm the current figures for your own business before you rely on them.