By: Sabelo Thusi
Running a small business is challenging, especially when resources are limited. In addition to the day to day trials, owners must comply with SARS, CIPC, and Department of Labour legislation. This article is especially for those with limited knowledge of these Acts.
The complex territory of tax can be petrifying. As an entrepreneur, you want to stay on the right side of the law, but nobody wants to overpay the tax man.
There are three common tax issues that are faced the need to be managed by small businesses:
Firstly, as the business owner, you need to inform yourself of the kind of tax for which your business is liable. On registering with SARS you will be required to identify the type of business you run. Depending on whether it is a sole proprietorship, private company or partnership you will be required to meet different tax requirements.
Secondly, you probably need to pay tax on behalf of you employees. Employers are liable for payroll tax, those deductions taken from the employee’s salary:
- Pay As You Earn (PAYE) is a percentage deducted from the employee’s salary, proportional to their earnings.
- Skills Development Levy (SDL), payable by the employer, is a compulsory State levy used to fund education and training.
- Unemployment Insurance Funds (UIF) is payable by the employer in equal shares. This compulsory levy funds unemployment benefits. Should your employee be retrenched or take maternity leave, for example, he or she can claim compensation from UIF.
Lastly, as a business owner, you are responsible for being tax compliant. It is imperative to ensure that you have checked all the boxes and your company is in good standing with SARS at all times. Ensure the following:
- You have no outstanding returns.
- You do not owe any money to SARS, apart from payment arrangements or suspension of debt agreements.
- You are registered for the entire tax product that you are liable for.
- Your particulars are up-to-date.
For information on your company’s tax status visit the SARS eFiling My Compliance Profile where you can identify what needs to be rectified.
Be alert to scams:
- Do not open or respond to emails from unknown sources.
- Beware of emails that ask for personal, tax, banking and eFiling details (login credentials, passwords, pins, credit or debit card information, etc. SARS will never ask for such information via email.
- SARS will not request your banking details through the phone, email or websites.
- Beware of fake text messages.
With these tips at your disposal, approaching the end of February can be a satisfying conclusion to your business year. Remember to ask for the help you need. Tax consultants are there to make your business process smoother.
Maxwell Sabelo Thusi is the owner and founder of 2CEE Holdings, a paralegal and business consultancy founded in 2014. The company addresses matters of financial literacy issue, assists those who have been blacklisted and seek debt relief. He also assists small businesses with their tax affairs. Follow @ThusiSabelo on Twitter and like the company on Facebook