Lets face it, no-one LIKES paying tax, but shying away from it and ignoring it doesn't help.
There are a small minority of people that realise that this strategy costs you more. They do the opposite, they become very comfortable with including tax as part of their financial planning process. It's a fundamental step to a sound financial future.
You have worked hard to make the money,
why not let us work just as hard to keep it!
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Personal Income Tax
Tax paying individuals will fall into one of 4 tax categories:
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Tax Submission Exempt Individual
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Normal Tax Individual
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Provisional Tax Individual
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Normal and Provisional Tax Individual
Depending into which tax category you fall, your planning requirements will differ.
Talk to us to help you understand and plan your tax efficiently.
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If you own your own business, there is a powerful link between your personal tax and your company tax. If not structured correctly, you may be paying double tax.
Companies Tax
If you are self-employed or a business owner, you will need to pay company tax, or as its known, Corporate Income Tax. How much companies tax you pay and what deductions you can claim will depend on the size and type of your business in South Africa.
Your company will fall into one of the following categories:
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For Sole Proprietors, your tax is is handled as a Provisional Tax Individual, and your personal tax and business tax is one and the same.
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Registered companies will register with SARS as a separate legal entity. The tax rate for companies is levied at a flat rate of 28% and returns are filed 3 time a year.
QUICK TIP: LOWER TAX RATES FOR SMALL BUSINESS
SARS does have alternate options for micro and small businesses.
If your company's revenue is lower than R 1 000 000 per year,
the option of Turnover Tax exist, where the tax submission process is greatly simplified.
If your company's revenue is lower than R 20 000 000 per year, and meet some extra requirements,
you may register as a Small Business Corporation (SBC) in order to get additional tax incentives.
One of the biggest incentives for SBCs is reduced corporate tax rates.
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Company RecordsThe Companies Act requires all companies to maintain their company records. A company must at all times have a copy of its Memorandum of Incorporation (MOI) and any amendments or alterations to it, as well as any rules that apply to the company in terms of its MOI. The company is also required to keep a register of its shares and its company secretary and auditor, to the extent that the company is required to make such appointments.
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Accounting RecordsThe Companies Act requires all companies to keep accurate and complete accounting records, which must be kept and be accessible at the company’s registered office.
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Annual ReturnsAll companies and close corporations are required by law, to lodge their annual returns with CIPC, within a certain period of time every year. An annual return is a statutory return in terms of the Companies and Close Corporations Acts and therefore MUST be complied with. Failure to do so, will result in the Commission assuming that the company is not doing business, or is not intending on doing business in the near future. Non-compliance with annual returns may lead to deregistration, which has the effect that the juristic personality is withdrawn and the company or close corporation ceases to exist.
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Financial StatementsEach year, a company must prepare annual financial statements, within six months after the end of its financial year. Depending on the companies' public interest score, these statements may also need to be either audited or independantly reviewed in a manner that satifies the regulations made in the Companies Act.
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Solvency and Reckless TradingThe Companies Act states that a company must not carry on its business recklessly, with gross negligence, with the intent to defraud or trade under insolvent circumstances. If a company trades in such circumstances, the Commission may require the company to cease carrying on business.
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Obligation to notify the CIPC of certain changesA company must notify the CIPC of certain information: - A change in the registered address; - A change in the location of the company records; - A change in the financial year end of the company; - Appointment, resignation and removal of a director - Commencement of Business Rescue; - Resolution to wind up a company
Unfortunately, your tax liability as a company does not end with companies tax, in addition, if you have employees, your business will be responsible for the following taxes as well:
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Value Added Tax (VAT)
VAT is a tax based on the value of goods or services. VAT is charged when a VAT-registered business sells goods or services to another business or to a non-business customer.
VAT can be shown on top of a price if it is a business-to-business sale and will be shown within the price if it is a direct to consumer sale.
When a business charges VAT on a sale they are collecting that money on behalf of SARS. If a business is VAT registered they can reclaim the VAT they have paid on purchases. The difference between what they have charged on sales and what they have paid on purchases must then be paid to SARS.
Any business selling VATable products or services can become VAT registered. However businesses with a turnover in excess of R1 million in any consecutive twelve month period will be required by law to register.
QUICK TIP: PLAN AHEAD FOR VAT REGISTRATION
If your business is currently nearing the VAT threshold, you would need to start planning the implementation.
Once you start adding VAT, someone needs to pay the extra 15%, either your company, or your customers.
If all your current customers are businesses that are already VAT registered, you can pass on the VAT as they will claim it back from SARS.
However, if your customers are mostly private individuals, or small unregistered companies, you would need to roll out much more delicately.