Tax tips for the young entrepreneur
Tax tips for the young entrepreneur
Tax – a three letter word that scares many entrepreneurs who don’t have a financial or accounting background. While tax is a daunting task for many, there are ways in which tax can be dealt with in a headache-free and painless way.
It’s recommended that people who don’t have a qualification in finance hire an accountant to handle their tax. It’s really complicated unless you know what you’re doing.
It’s important to make use of an accountant that is well-known, efficient and eager to assist in your finances. Look for someone with experience in your industry.
If you run your business as a sole proprietor, you will complete your tax returns as an individual, declaring your business’ revenue as income and claiming your eligible costs.
Whether you make use of a tax practitioner or not, the first step is to gather all your documents together in order to compile your tax return. If you have used the services of a tax practitioner it’s crucial to check your tax return as the taxpayer is fully responsible for everything that is contained in the tax return, even if it is compiled by a consultant.
Once you are satisfied with your tax return, you then need to submit your return to SARS. SARS will review your tax and calculate your tax liability based on the income you declare and the tax-deductible expenses you have incurred for the period of assessment. In some cases it may result in a refund.
What you need to know if you have registered your business
If you have a company, it will need to be audited once a year and you will submit your tax forms as a company.
If you fall behind on your tax returns or don’t pay what you owe, you will pay penalties so this is a very important compliance issue to stay on top of.
You can only claim for VAT is you are VAT registered. You can register for VAT if your company pays more than R50,000 per year in VAT.
Hire young people and get a tax cut
The youth now stand a better chance of being employed thanks to a tax incentive by SARS. Implemented in January 2014, SARS introduced an Employment Tax Incentive (ETI) which allows South African employers the opportunity to increase the number of young people they hire. This incentive was implemented due to the high unemployment rate of young people.
Warning, you could be scammed!
One needs to be aware of the scams that are taking place out there, with tricksters hoodwinking people left, right and centre. Here are some tips from SARS that will help you during your tax journey.
When a business offers you an attractive discount for cash and they don’t issue a receipt, it may be because they are not going to pay the VAT; do not open or respond to emails from unknown sources; beware of emails that ask for personal, tax, banking and eFiling details.
Tax can be intimidating but if you become familiar with how it works and make use of a tax practitioner who knows tax well, then it can be smooth sailing.