Starting a business is a daunting task for any new business owner, especially when it comes to ensuring that your business is compliant. New business owners are generally experts in the line of work they are embarking on, but not necessarily experts in business compliance, especially tax matters.
At Value-Able Consulting we aim to ensure that all businesses are compliant and follow the legal requirements to ensure that your business avoids any issues, especially with the Taxman. Keeping your tax issues up to date, ensuring all necessary steps are followed and adhered to when employing people and when entering trade contracts with other companies, etc.
With South Africa’s youth facing a very high unemployment rate and with the new challenges companies face with Covid, lockdowns, and retrenchments, finding a job is more challenging than ever before. Many of the youth are looking at starting a business as a way to overcome some of these issues. But starting a business is more than just getting a company registered and then selling your product or service. A major challenge for any new business owner is understanding tax requirements and compliance.
Getting your business fully tax compliant is a time-consuming and confusing process, but without tax compliance, your business can be seen as non-compliant by SARS and this can leads to loss of money in paying penalties, which also comes with interest charges. But being tax compliant also provides opportunities for businesses like being able to apply for government tenders, which will only accept tenders from tax complainant companies. It’s also just good business practice to be tax compliant as this gives your clients and potential clients peace of mind that they are dealing with a professional company, that has no outstanding tax returns, doesn’t owe money to SARS, has registered for all taxes, and is compliant in the terms of the tax laws.
Value-Able Consulting can ensure your business is tax compliant by following proper accounting practices to your business by ensuring that your businesses:
- Expenses and disbursements are in order.
- Proper filing of Income and receipts.
- Accurately prepare and submit tax returns.
- Ensuring that your business is registered for the right tax requirements relating to the business and industry.
All companies are automatically registered for corporate income tax with SARS and will need to declare corporate income tax on an annual basis. For some companies, additional requirements like registering for VAT and Pay as you earn (PAYE) are also required and will also be liable for these taxes.
On the upside of being tax compliant, it also means that your company is entitled to tax incentives if your business qualifies. These include Turnover Tax, Small Business Corporation (SBC) Tax, and Employment Tax Incentives (ETI’s). Turnover tax is only available for small businesses a tax incentive with a qualifying annual turnover of R1 million or less for sole proprietors, partnerships, close corporations, and companies. The second type of incentive for SMME’s is SBCs, which allows qualifying businesses to pay reduced favourable tax rates, once a specific criteria is met.
VAT Compliance
Businesses with a turnover of over R1 million must register for VAT with SARS. Businesses with an annual turnover of less than R1 million may voluntarily register for VAT. A business registered for VAT will be required to charge 15% VAT on the taxable supplies of goods and services. Registering for Vat can be complicated and daunting and business owners are encouraged to seek guidance before applying for VAT.
PAYE
Companies with one or more employees will be required to also register for PAYE and will also be liable for Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF)contributions to SARS. PAYE is a tax that is deducted by an employer from an employee’s salary on a monthly basis. . An employer must also register for UIF contributions with SARS and withhold 1% of the remuneration paid to an employee, while the employer must contribute another 1%. SDL is a tax imposed to encourage learning and developing skills of employees and is levied at 1% of the total amount paid in salaries to employees.
Depending on the size on the size of your business, business owners are liable to deduct or withhold PAYE, SDL, and UIF on a monthly basis which must be paid over to SARS. Having a dedicated accounting firm can assist business owners with completing a monthly employer declaration (EMP201) based on the tax allocations mentioned above.
Business owners and SMME’s are encouraged to ensure that all their tax returns are prepared and submitted timeously and in an accurate manner, to avoid any levy interest and penalties on late and inaccurate income tax returns by SARS. Keeping your business tax complaint ensures good business practice without any hiccups when applying for tax clearance certificates.
Investing in a good accounting company to assist and keep you up-to-date on your company’s accounting practices, will ensure that you avoid penalties with SARS.
Contact us for more information on your tax compliance.
Email: enquiries@value-able.co.za
Tel: 010 312 6081
