How To Comply To Tax Obligations As A Small Business In South Africa. Complying with your tax obligations as a small business can be a very difficult and daunting task as they are a lot of processes that need to be followed to the tee if a small business wants to comply with its tax obligations. The lack of small businesses complying to tax obligations shows that there isn’t enough information out there to educate and empower small business owners about tax obligations. Below are some of the ways small businesses can start their journey of complying to tax obligations.
Register With The CIPC
If you are starting out and need to register as a company, you will have to contact the Company and Intellectual Property Commission (CIPC), formerly called CIPRO. Please note that Companies are first required to register with the (CIPC) offices before registering with SARS for an Income Tax reference number. Once a taxpayer registered with CIPC, SARS will automatically generate an Income Tax reference number. Taxpayer must then register on eFiling to transact electronically.
Register For Turnover Tax
Turnover tax is a simplified tax system for small businesses with a qualifying turnover of not more than R1 million per annum. It is a tax based on the taxable turnover of a business and is available to sole proprietors (individuals), partnerships, close corporations, companies and co-operatives. Turnover tax takes the place of VAT (in the instance that you have not decided to elect back into the VAT system), provisional tax, income tax, capital gains tax, secondary tax on companies (STC) and dividends tax. So qualifying businesses pay a single tax instead of various other taxes.
Register For VAT
It is mandatory for any business to register for VAT if the income earned in any consecutive twelve month period exceeded or is likely to exceed R1 million. Any business may choose to register voluntarily if the income earned, in the past twelve month period, exceeded R50 000. A small business that is registered as a micro business under the Sixth Schedule of the Income Tax Act may also register for VAT and may elect to submit returns and payments every four months, ending on the last day of June, October and February.
Register for Employees’ Tax [Pay-As-You-Earn (PAYE)]
According to law, an employer must register with the South African Revenue Service (SARS) within 21 business days after becoming an employer, unless none of the employees are liable for normal tax.
Obatain Tax Clearance Information
As a Small, Micro or Medium Enterprise (SMME), at some point or another you will be required to provide / confirm / share your Tax Clearance information with another entity. This could be to apply for a tender, new contract, good standing or in respect of Foreign Investment. Your Tax Clearance information can be obtained via the Tax Compliance Status system.
