PAYE stands for Pay-As-You-Earn. It is the system through which employers deduct employees’ tax from remuneration and pay the relevant amounts over to SARS.
Instead of employees paying the applicable employment tax directly to SARS each month, the employer generally calculates and deducts the required amount from employees' remuneration and accounts for it to SARS.
PAYE therefore becomes an important part of your payroll responsibilities once your business employs people who fall within the relevant tax requirements.
PAYE registration creates the necessary employer tax relationship with SARS so that your business can fulfil its obligations as an employer.
It is important to understand that PAYE registration is not the same as simply registering your company with CIPC or obtaining an income tax number. Employer tax registration is a separate compliance requirement.
Depending on your circumstances, your business may also need to account for Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF) contributions. SARS confirms that employers who register with SARS for PAYE and/or SDL also need to register to pay UIF contributions.