What you need to know about VAT: For entrepreneurs

What you need to know about VAT: For entrepreneurs

VAT is a form of tax that everyone has to pay when they buy goods. It’s standardised at 14% in South Africa for any item that is not staple food.

As a business, you must VAT registered when you bring in turnover that exceeds R1 million per year.

Here are some VAT tips to consider as a business owner:

1. Prices: Your prices on your quotes and invoices must include VAT in the total if you are VAT registered. You can only charge VAT is you are VAT registered.
2. Invoices: All invoices for more than R50 must say TAX INVOICE on it if you are VAT registered. You must have your client’s name, address and VAT number on your invoice is they are VAT registered. Your name, address and VAT number must also appear on your invoice.
3. Claiming from SARS: Once you’re VAT registered, you will be able to claim the difference of the amount you paid in VAT versus what you charged in VAT. If you charged more than you paid, you will owe SARS the difference.
4. VAT cycles: Unlike tax, you will need to submit your VAT to SARS every month, two or four months, depending on the VAT cycles you qualify for. Diarise the dates and don’t miss the deadlines so that you don’t have to pay penalties.
5. VAT payments: VAT payments to SARS must be paid either by the 25^th of the end of the month, so double check when yours is due.

If you have a good bookkeeping system in place, VAT isn’t that difficult to understand. As with anything , if you organised, you will do well when it comes to running your business.