Small business wake-up call
As a follow-up to our previous article regarding knowing your business, now comes the most important part of the business: Tax.
Small business owners take advantage and do not want to get the professional accountants to assist them. They end up owing the SA Revenue Service (SARS) a lot of money and, to some point, decide to shut down their businesses.
Most small business owners do not understand the implications of not complying with SARS which could result in their failure to submit annual tax returns.
There are various tax requirements to consider when submitting returns.
l Sole proprietorship: the owner must include business income in the personal annual tax return as you do not register it with SARS. All profits and losses accrue to the owner because you and the business are seen as one person, therefore you will be liable for income tax as an individual.
l Partnerships: each partner is taxed on their personal capacity as well as on their share of taxable profits, also you will be liable for income tax.
l Private company: this is a separate entity to the owner as it is a taxpayer on its own. There are few factors that guide you to know which tax you will be liable for, such as your turnover or payroll.
It is advisable to get registered accountant and tax professionals to assist you with your bookkeeping and submission of your annual tax returns as they will be able to advise on minimizing your tax. The other important aspect that most business owners pass is insurance.
When you take out a loan there must be a risk policy to use as surety so that when something happens you know that your company is safe. Also, as employer you will need to sort out issues around the UIF, employee benefits and medical aid.
- Zaba is the owner of Tokoloho Financial Services, an insurance brokerage. She is also the co-author of Save Invest Prosper and is an executive member of the Financial Services Intermediaries Network, working on policy in the insurance industry.