04/02/2026
A lot of business owners assume that any money they pay themselves from the business is a salary.
That’s not always true — and this misunderstanding causes serious tax and compliance problems.
Here’s the truth 👇
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If You’re NOT Registered for PAYE & UIF, That Money Is NOT a Salary
For money to be classified as a salary, the following must be in place:
✔ The company must be registered for PAYE with SARS
✔ The company must be registered for UIF (and SDL if applicable)
✔ Monthly payroll submissions (EMP201) must be done
✔ Annual payroll reconciliation (EMP501) must be submitted
✔ IRP5 must be issued to the director/employee
If none of this is happening, then legally:
👉 That money cannot be called a salary.
⸻
So What Is That Money Then?
In most cases, SARS and accountants will classify it as a:
➡️ Loan to Director
This means:
• The company is seen as lending money to the director
• The director now owes the company
• It is recorded as a liability in the company’s books
Even if the money was used for personal expenses, groceries, school fees, or rent — without payroll registration, it’s still not salary.
