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10 Steps to Pain Free Interim Reconciliation Processing

10 Steps to Pain Free Interim Reconciliation Processing

Companies of every size and in every industry have a lot on their plate when it comes to tax-related paperwork. And while it is often an arduous task, ensuring accurate submission and meeting SARS deadlines is one of the most important responsibilities they face.

For example, every six months, organisations across South Africa need to submit their Interim Reconciliation. This includes IRP5 or IT3(a) tax certificates, EMP201 or EMP501 statements, as well as actual payments made to SARS, for the six-month period—1 March 2021 to 31 August 2021.

This year’s Bi-Annual Submission period began on Monday 13 September 2021 and will close on 31 October 2021.

It shouldn’t be a complicated and painful task. There are 10 easy steps that companies can take to complete their Interim Reconciliation process. In fact, submitting the Interim Reconciliation can actually benefit the organisation, because it eases the pressure on business owners with their Employer Reconciliation at the end of the tax year, as only six-months have to be reconciled for each submission.

Step one: Give the process a head start by finalising the payroll or payrolls. No company can proceed with their submission if the payrolls attached to the submission period in question have not been finalised. This may seem obvious, but too often this is left till the last minute.

Step two: Balance financials for PAYE, UIF, SDL, and ETI, if applicable. To do this, organisations should compare their payroll financial information from March 2021 to August 2021 against the EMP201 values they have submitted to SARS. Any discrepancies uncovered in the comparison must be addressed in the month of imbalance, and corrections made to the payroll to rectify any errors.

Step three: Next, remember that discrepancies could be caused by payroll changes being made on your employee payslips after payment has been made to SARS on the monthly EMP201.

Step four: Identify the differences. If organisations pick up any discrepancies between the payroll and the EMP201 payment to SARS, we advise them to go through the financials first, month-on-month to pinpoint the month of imbalance. Once this has been identified, the companies need to check each employee record to confirm the difference and then make any necessary adjustments to correct the situation.

Step five: Organisations need to export their test CSV file for upload into [email protected]™ Employer. Remember, it is possible to export more than one Test File until all of the validation warnings have been cleared.

Step six: Export the live CSV file for upload into [email protected]™ Employer. Again, the live CSV should be exported once all of the validation errors have cleared.

Step seven: Updating the [email protected]™ software to the latest version is the next step. Bear in mind that the application will advise whether or not a new version is available. Once the latest version has been installed, the business may submit the Bi-Annual Submission. This is a critical step, because reconciliations and tax certificates done on previous versions of [email protected]™ software will more than likely be rejected by SARS and failing to update this software could also result in validation errors.

Step eight: The payroll department needs to verify their employer information. To do this, log in to [email protected]™ Employer, select your company, and check that all mandatory fields are updated with the company’s correct information.

Steps nine and ten: Complete the EMP501 Reconciliation and then submit the electronic information to SARS via [email protected]™ Employer. To do this, we advise organisations to refer to the [email protected]™ Employer Guide.

Employer reconciliations do not necessarily need to be a hassle for the company. Thinking ahead and doing some preparation in advance can go a long way towards making the reconciliation process smooth, seamless, and less stressful.

PaySpace has compiled a checklist to serve as a guideline to complete your bi-annual submission and [email protected]™ Employer process. Find it here and good luck!

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