Tackling tax as an entrepreneur
03 November 2017
It’s said that death and taxes are life’s only two certainties. The least desirable of the two, however, is far from certain for most of us. Luckily for all you small business owners out there, the South African Revenue Service (SARS) ranks among the world’s most efficient tax agencies. And if you play by the rules you’ll find that tax compliance is far simpler than it seems.
In the interest of getting you off to the right start with your SMME tax situation, we’ve compiled a list of the 5 essential steps to take to ensure that SARS is in your corner.
- Register your business for Income Tax
In order to register for Income Tax, you must register your business with the Company Intellectual Property Commission (CIPC). You will then receive a registration number and automatically be registered for Income Tax. In some cases you will be required to go into a SARS branch to register your business, but SARS will contact you shortly after CIPC registration to confirm if this is the case.
Depending on the type of business you have, you may be required to register for additional tax such as PAYE (Pay-As-You-Earn) or VAT (Value Added Tax), and this can be done online through SARS eFiling or by going into your nearest SARS branch and chatting to one of their advisors, who will guide you through the process.
- Register for eFiling
SARS really does try to make your tax life as simple and convenient as possible and their eFiling tax portal is a great tool for handling most of your tax requirements in a secure, online environment. Through eFiling, you will be able to submit tax returns and declarations, make payments, and much more without having to leave your office.
To begin the eFiling registration process takes just three steps, outlined below:
- Head over to SARS eFiling
- Click ‘Register’
- Choose the profile you wish to register for (individual taxpayer, tax practitioner or organisation. As an SMME owner you’ll most likely want to choose ‘tax practitioner’)
You will then be guided through a further six-step process, which takes between 5-10 minutes to complete and will ask you for the following information: Tax registration number, identity number, personal details, banking details, and company registration number.
You’re now ready to handle the majority of your tax online, quickly and easily.
- Verify your Tax Compliance Status
A Tax Clearance Certificate (TCC) is an important document confirming your status as a registered tax paying business. Having a TCC is required in applying for Tenders and Good Standing as a taxpayer as well as being necessary for Foreign Investment Allowance (FIA) and possible emigration in future.
You can verify your Tax Compliance Status online via eFiling.
- Familiarise yourself with the new tax rates for 2016
The Small Business Corporation (SBC) tax rates are changing for the financial year beginning on the 1st of April 2016 and it’s a good idea for you to get up to speed on the incoming changes and know exactly which tax bracket you fall into.
We’ve listed the new rates below:
Make sure you know exactly how much tax your business should be paying and that you’re complying accordingly to keep SARS satisfied.
- Verify the status of your tax practitioner
Although SARS makes it fairly simple for you to handle all of your own tax requirements, at the end of the financial year you may want to consider hiring a tax practitioner to prepare and submit your business tax return on your behalf. This is worthwhile for the busy SMME owner who doesn’t have the time to go through the somewhat lengthy tax return process.
However, it is crucial that you ensure your tax practitioner is registered and reliable and a quick check can tell you all you need to know.
You can easily verify the status of your tax practitioner on eFiling by following these steps:
- Head over to SARS eFiling
- Click ‘Quick links’
- Click ‘Confirm practitioner registration status’
- Type in your practitioner’s registration number along with the security PIN that appears on the page
- Click ‘Search’
If your practitioner is registered with SARS, their name, surname, practitioner number, and registration (“REGISTERED”) status will appear. This indicates that this individual is able to prepare and submit a tax return for you in accordance with SARS requirements.
If you follow these 5 simple steps you will be well on your way to a prosperous start for your new SMME, without the thought of tax giving you sleepless nights. Remember that SARS is there to help with all your tax enquires and issues and you can always head into a SARS branch should you require any assistance or advice in this regard.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.