HOW TO COMPLY AS A SMALL BUSINESS: A COMPLETE GUIDE

As a small business owner, complying with tax obligations can seem like a daunting task. However, with the correct information and guidance, it can be made more accessible. In this article, we will discuss the various steps and procedures that small business owners need to follow to comply with their tax obligations in South Africa.

Registering your business with the CIPC

• The first step in complying with your tax obligations is registering your business with the Companies and Intellectual Property Commission (CIPC). The CIPC is responsible for the registration of all companies in South Africa.
• Once your company is registered with the CIPC, you can apply for an Income Tax reference number from the South African Revenue Service (SARS).

Registering for an Income Tax reference number with SARS

• Once your company is registered with the CIPC, you can apply for an Income Tax reference number from SARS. This can be done by completing the IT77 form, which is available on the SARS website. It is important to note that companies are required to register with the CIPC before registering with SARS for an Income Tax reference number.

Registering on eFiling

• Once you have your Income Tax reference number, you must register on eFiling. eFiling is an online platform SARS provides that allows taxpayers to transact electronically. Registering on eFiling allows you to submit your tax returns and make payments online, which is much more convenient than doing it in person.

How to obtain your Tax Clearance Information

• As a Small, Micro, or Medium Enterprise (SMME), you may be required to provide or confirm 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. You can obtain your Tax Clearance Certificate by visiting your nearest SARS branch or logging onto eFiling.

Registering 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.
• The 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. It’s elective – so you choose whether to participate.

Registering your business for VAT

• If your business has a taxable turnover of more than R1 million annually, you must register for Value Added Tax (VAT). VAT is a tax added to the price of goods and services and is payable by the final consumer.
• To register for VAT, you must complete the VAT 101 form, which is available on the SARS website.

Registering for PAYE, UIF, and SDL

• If you have employees, you must register for Pay-As-You-Earn (PAYE), Unemployment Insurance Fund (UIF), and Skills Development Levy (SDL). PAYE is a tax that is deducted from employees’ salaries and paid to SARS.
• UIF is a fund that benefits workers who become unemployed or cannot work because of illness, maternity, or adoption leave.
• SDL is a levy that employers pay to finance skills development in South Africa.

Registering as a Small Business Corporation (SBC)

• Suppose you’re a small business owner who has already registered your company and meets specific requirements. In that case, you may consider registering as a Small Business Corporation (SBC) to enjoy additional tax incentives.
• One of the most significant benefits of registering as an SBC is the reduced corporate tax rate that you’ll be entitled to.
• You can see the reduced tax rates SBCs are eligible for by clicking here. Don’t miss out on these valuable tax incentives – consider registering your small business as an SBC today.