Being a small business owner can be challenging, and comes with a multitude of responsibilities. When you’re busy running around trying to fulfil orders, the last thing you need in the back of your mind is the various tax regulations you need to adhere to. The South African Revenue Service (SARS) has specific and often complex rules that businesses must follow to remain in good standing, and constantly meeting these standards can quickly become overwhelming. As a small business owner, your primary focus should be on growing and sustaining your business, not getting bogged down by the intricacies of taxes. This is where the expertise of a tax practitioner becomes invaluable.

The Basics of Tax Compliance for Small Businesses

Filing taxes can be a time-consuming and stressful task for anyone. The fear of making errors, missing out on potential tax benefits or facing penalties due to non-compliance with constantly changing tax laws is always looming. By enlisting the services of a qualified tax practitioner, you can alleviate a lot of this unnecessary stress.

Small businesses in South Africa are subject to several tax regulations that ensure they contribute to the economy, and it is important to know which taxes your business is liable for:

1. Income Tax:

   Small business corporations (SBCs) can benefit from a reduced tax rate in South Africa. This tax rate is lower than the standard corporate rate, in a bid to provide relief to smaller enterprises. However, to qualify as an SBC, your business must meet specific criteria, such as having all shareholders or members as natural persons and a gross income not exceeding R20 million for the year. With the help of an experienced tax expert, you can be sure that you won't miss out on opportunities like these and will be made aware of all the taxes you owe. 

2. Value Added Tax (VAT):

   If your business's total value of taxable goods or services exceeds R1 million over 12 months, you're required to register for VAT. VAT-registered businesses must submit VAT returns to SARS regularly. This adds another layer of complexity, and understanding VAT obligations and maintaining accurate records is crucial to avoid penalties.

3. Employees’ Tax (PAYE):

   If your business employs staff, you are required to deduct Pay As You Earn (PAYE) tax from employees’ salaries and pay it over to SARS. PAYE is an important, recurring part of tax compliance, and failure to remit these taxes can result in significant fines.

Legal Requirements for Small Businesses

Making sure your business stays compliant involves much more than just meeting tax obligations. Small businesses must also navigate a range of other regulatory requirements such as:

1. Annual Returns:

   Filing annual returns with the Companies and Intellectual Property Commission (CIPC) is a critical requirement for businesses. Failure to submit these returns can lead to the deregistration of your company, which could in turn halt your operations and damage your business reputation. A tax expert will collect all the necessary information throughout the year, and make sure that your annual returns are filed accurately and on time, every time.

2. Beneficial Ownership Filings:

   Recent regulations in South Africa require businesses to disclose the identities of their beneficial owners - those individuals who ultimately own or benefit from the company.  Without the assistance of a tax professional, it can be difficult to keep all the right information and documentation up to date and stay in the loop with these types of changes.

3. Workman’s Compensation Fund:

   Filing and paying workman’s compensation is another important requirement, especially for those operating in industries with higher risks of workplace injuries. Ensuring that your employees are covered and that all relevant filings are up to date protects both your workers and your business. 

Choosing the Right Tax Practitioner

The relationship you build with your tax practitioner can last for decades, assisting your business through various stages of growth and change. As you expand into new markets, introduce new products or grow your team, your tax practitioner will be there to guarantee everything happens within the law.

It’s important to choose someone you can rely on and who understands your business. Contact Booysen Accountants today to book a consultation and together, we will start building a better future for your business. By partnering with a registered tax practitioner, you leave the hard work to the experts, allowing you to focus on running and growing your business.