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Business Tax Season Hacks to Make Your Life Easier

Business Tax Season Hacks to Make Your Life Easier

So, the dreaded tax season has arrived. Time to turn on the light, grab a strong cup of coffee, and tackle that mountain of paperwork. If you’re a business owner or manager in South Africa, you may feel a pang of trepidation as you embark on this journey, but don’t worry, we’ve got you covered. This article contains 13 tips to ease the pain of tax season and to ensure your business stays on the right side of the South African Revenue Service (SARS).

Top Business Tax Season Tips for Businesses in South Africa (2023)

If you haven’t already, registering your business with SARS is a good place to start. 

This is your maiden voyage, setting your business on course. To comply with the Company and Intellectual Property Commission (CIPC) regulations, businesses in South Africa are supposed to register their business online. You’ll then receive a Company Income Tax reference number, an essential tool for eFiling and dealing with SARS. Even sole proprietors can benefit from doing this as a first step.

It’s a good idea to remain punctual with tax payments.

Business tax deadlines are crucial in tax season. With the season opening on July 7 this year, you can aim to file your tax return before SARS announces the closing date. Those businesses classified as provisional taxpayers should mark February and August for their first and second instalment payments, respectively.

Want simpler tax? Micro businesses can register for turnover tax.

If your business falls into the category of a micro business with an annual turnover of less than R1 million, you can consider registering for turnover tax. A simpler tax system, it consolidates several tax types into one, lessening administrative burden. Note that this doesn’t exempt you from paying employee tax and Unemployment Insurance Fund (UIF) contributions.

Did you know there are tax benefits for small businesses?

Your business, if earning less than R20 million per year, qualifies as a Small Business Corporation (SBC). As an SBC, you can access significantly reduced tax rates compared to larger corporations. For example, income of R91,250 or less is subject to a 0% tax rate.

There are great ways to maximise tax deductibles.

Deductible expenses can form part of your tax returns. They fall into several categories, including day-to-day, educational, entertainment, capital, and other expenses. These costs can be used to reduce your business’ taxable income. However, it is important to ensure these are genuine business expenses, as SARS may require you to prove it.

How to harness solar energy for tax savings.

South African businesses that invest in renewable energy can benefit from a 125% tax deduction on assets used to generate it. This initiative reduces your taxable income, contributing positively towards the environment and your bottom line.

Remember to keep your employee tax submissions honest & accurate.

Under the PAYE system, employers are responsible for deducting tax from employee salaries and paying it to SARS. Complying with this requirement is crucial, as failure to do so can result in penalties or even jail time.

Tax evasion isn’t worth the cost.

In South Africa, there are several types of tax crimes, and their penalties can be severe. These range from failure to declare income, to fraudulent invoicing, and failing to submit tax returns. To avoid facing criminal prosecution or maximum non-compliance penalties, always ensure your business complies with tax laws.

Avoid merging your business and personal finances.

One of the most common pitfalls for new and small business owners in South Africa is merging personal and business finances. While it may seem convenient at first, it could lead to a tangled web that becomes a nightmare during tax season.

Instead, it is useful to maintain separate business bank accounts and credit card accounts for business expenses. This will help streamline your tax filings and ensure accurate record keeping. Also, if you’re using business accounting software, it will allow you to easily track your business transactions and taxable income.

Track Your Income and Cash Flow - Startup business in South Africa

Understand your business structure and its tax implications.

The type of business you run, whether it’s a sole proprietorship, a limited liability company, or a corporation, has a significant impact on your tax liability. Each type of business structure has different tax implications and deadlines.

For instance, if you’re running a micro business, you may be eligible for turnover tax, a simplified tax structure for businesses with an annual turnover of less than R1 million. Make sure to understand your business structure and its tax implications fully to ensure you’re making the right tax payments and deductions.

Consider for a digital service for tax filings.

In today’s age, it’s important to make use of digital services. South Africa’s tax authority, SARS, has a robust e-filing system that businesses can use to manage their tax affairs. The digital platform not only reduces paperwork but also enables you to keep track of your tax payments, financial documents, and deadlines. Also, if your business is registered for e-filing, you can opt for business tax e-file to make your tax season hassle-free.

Consult with tax practitioners or accounting services.

Even with the best organisation and planning, the world of business taxes can be complex and overwhelming, particularly if you’re juggling other business activities. It might be beneficial to consult with tax practitioners or accounting services. They can provide detailed guidance on your tax returns, business tax deductions, and ensure your business complies with South African tax law changes. Plus, it will give you more time to focus on what you do best: growing your business.

Get business insurance for help with tax submissions.

Did you know that having adequate business insurance can actually help you with tax season sometimes? That’s because some insurance companies include a free tax assistance benefit in their business insurance plans.

Business cover is essential for the financial health of your business. If you’re looking for free business insurance quotes, you can get them free by filling in the form on this page (it only takes a minute). Remember, insurance isn’t just a business expense; it’s an investment that can protect you from unexpected financial hits, and it’s deductible too!

By following these tips, you’re setting your business up for a smoother tax season. Remember, it’s all about staying organized, keeping accurate records, and understanding your obligations. And if you ever feel overwhelmed, professional help is a mere click away.