GETTING TAX-WISE FOR YOUR SMALL BUSINESS by Simply

 

Has your upcoming tax return got you feeling a bit under pressure? Perhaps you are not sure where to start! We have drafted 5 tips to help your tax return go smoothly and avoid any sudden non-compliance.

There are plenty of perks for owning your own business: you’re in charge of your own destiny, and you decide when to take a holiday, you enjoy freedom and flexibility, find your own work-life balance, all while you get to do work you are passionate about—and then be paid for it.

Some factors, like tax, are not that enjoyable. After all who enjoys preparing tax returns, and worse, being told you owe an amount to SARS.

Many small businesses are already struggling following the challenges of the last 2 years and the thought of parting with your money seems unfathomable. Still, you must get tax filing right to avoid penalties. SARS’s Strategic Plan for 2020/21 to 2024/25 also spells it out clearly-there will be increased levels of compliance, higher detection of those who do not pay, and fines and penalties for those who don’t comply.

  1. PLAN FOR THE WORST AND HOPE FOR THE BEST

Few things are as stressful as to suddenly having to pay over a large tax amount out of the blue when your small business is not cash-flush. To avoid this, make sure you do a rough calculation monthly and set this amount aside in a tax account. Transfer the VAT portion of every invoice into a different account so that the money is ready to be paid over every 2 months without affecting your regular bank balance.

  1. DON’T BE AFRAID TO ASK FOR HELP

While being in small business sees you wearing different hats at once, tax is one area you should hand to professionals. You will need the help of a tax practitioner. This will help you immensely, especially when you hire more employees or service a larger industry. While this added expense may seem unnecessary, in the long term, it will pay off.

  1. PROCESS ALL BUSINESS-RELATED EXPENSES THROUGH YOUR BUSINESS

A business takes resources to run. Besides the time and materials needed to create your offering, there are also other everyday expenses, such as transport, office equipment, business entertainment, and an interest connection, to name a few. You can put most of the business-related expenses through your business.

  1. KEEP YOUR PAPERWORK UP TO DATE

While we are moving more and more to a paperless world in this digital age, it’s tempting to think that tax paperwork has fallen by the wayside. To stay tax compliant, you still need to keep on top of your paperwork-even if these are digitally submitted. You will need to submit an EMP201 every month, which can be done via eFiling and a VAT return every 2 months. Keeping supporting documents such as sales slips, invoices, receipts, bank deposit slips, and other documents, will help you manage your matters better and ensure that you remain tax compliant.

  1. HAVE A PROPER INVOICING SYSTEM

The best way of keeping track of the money coming in and going out is to have a proper invoicing system. There are many accounting tools –such as Freshbooks, Xero, Pay Space and Zoho.

Tax is just one side of your business you need to keep on top of as a small business owner to run a healthy company. Ensure that you stay on top of your tax return through proper planning and a good tax strategy, and the taxman won’t  come knocking on your door unexpectedly.

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