HOW TO PAY YOURSELF AS A BUSINESS OWNER IN SOUTH AFRICA — SALARY VS DIVIDENDS EXPLAINED

You’ve started your business, landed clients, and cash is finally coming in. But now comes a tricky question: how do you actually pay yourself?

Should you take a salary? Withdraw dividends? What are the tax implications? What does SARS expect?

At ACS Plus, we help South African business owners pay themselves legally and tax-efficiently. Here’s what you need to know.

Option 1: Paying Yourself a Salary

If you run a (Pty) Ltd company, you can pay yourself a monthly salary just like an employee. This requires that:

• You are registered for PAYE (Pay As You Earn)

• You issue monthly payslips and IRP5 certificates

• You deduct and pay over UIF, PAYE, and possibly SDL to SARS

Pros:

• Consistent income — good for personal budgeting and bank loan applications

• Pays into your UIF and retirement if structured correctly

• Complies with employment laws and SARS requirements

Cons:

• Subject to personal income tax at marginal rates (up to 45%)

• Admin costs — you’ll need payroll systems or a payroll provider

Option 2: Paying Yourself via Dividends

Dividends are paid from company profits after tax and don’t count as salary. You declare them through a board resolution, and they’re subject to Dividends Tax (currently 20%).

Pros:

• Lower tax rate than salary if your personal income is high

• No UIF, PAYE, or SDL required

• Simpler if you only need occasional income

Cons:

• Can only be paid from retained profits

• Irregular and unpredictable income

• You must submit a dividend declaration and pay SARS within the deadline

Example: Salary vs Dividends Comparison

Let’s say your company made R600,000 in net profit this year. Here’s a basic comparison:

Option	You Take	Taxes Paid	Net to You
Full Salary	R600,000	~R180,000 (PAYE)	~R420,000
Full Dividends	R600,000	R120,000 (20%)	R480,000
Balanced Approach	R300,000 salary + R300,000 dividends	PAYE + Div Tax	Potentially most tax-efficient

This is simplified — actual outcomes depend on your total income, company expenses, and tax planning strategy.

Things to Keep in Mind

• SARS requires compliance on both personal and business taxes before dividends can be paid.

• You must keep proper records and board resolutions for all dividend payments.

• The optimal structure depends on your lifestyle needs, tax bracket, and long-term business goals.

How We Can Help

At ACS Plus, we’ll help you:

✅ Calculate the most tax-efficient way to pay yourself

✅ Handle SARS payroll and dividend declarations

✅ Avoid penalties and non-compliance

✅ Structure your remuneration to support wealth growth and business planning

Pay Yourself Smartly, Not Just Legally

Too many business owners lose money to unnecessary tax just because they didn’t get advice early enough. Don’t guess your way through SARS compliance — get it right from the start.

Book a free consultation today to review your remuneration strategy.

Email queries@acsplus.co.za with the header: SALARY REVIEW