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Account for SARS penalties and interest in three easy steps

by , 10 October 2014
If you make a mistake on your taxes or try to bend the rules, SARS will charge you penalties and interest. If this happens, you need to account for this money each month and reflect it in your payroll.

How do you do this?

It's quite simple and you can do it in three easy steps.

 

Use these three steps to correctly account for SARS penalties and interest in your payroll

 
Step #1: Account for the accurate penalties and interest you owe SARS. This will become part of a monthly debt you must pay off in installments.
 
Step #2: Capture it in your cash book when you pay the penalties and interest. This is your monthly proof that you made these additional payments to SARS. 
 
Step #3: Update your accounting system to ensure your Salary Control Account reconciles and can prove you accounted for all transactions. If the account doesn't reconcile, investigate the differences and follow up.
 
Here are two possible reasons for differences.
 
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Two possible reasons for the differences in your payroll

 
1. You accrued more interest to the account after you completed your accounting entries. Make sure you account for all interest and penalties properly. 
 
2. SARS raised additional penalties that the entity doesn't necessarily agree with. Follow up with SARS and investigate why.
 
This will help you ensure you always account for the money you owe SARS. 
 
For more tips and advice on payroll management check out the Practical Accountancy Loose Leaf Service.  It has all the information you need to correctly manage your payroll.
 
If you have any questions, pop over to the Accounting and Tax Club and ask one of our experts. They can give you the answers you need. 
 

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