Many small business owners have their hands full with tax paperwork. If you’re one of them, the admin probably ranks low on the list of your favourite things to do. However, filing accurate tax returns and meeting the South African Revenue Service (SARS) deadlines is one of the most important responsibilities you face.
The interest accumulated and penalties payable on late or inaccurate VAT, pay-as-you-earn (PAYE), or company income tax returns can be harsh. That means it is in every small business’s interests to prepare the relevant submissions on time and ensure they are accurate.
Here are several ways to get it right:
Speak to an accountant
Unless you’re an accountant, it’s wise to seek help from a qualified professional to understand your tax obligations, including annual ITR14 SARS submissions.
The ITR14, or Income Tax Return, is a form that SARS requires all registered companies to complete and submit once a year. This submission is where you declare your income and expenses so SARS can calculate how much tax your business needs to pay or how much of a tax refund SARS needs to pay to you.
If you’re operating through a sole proprietor or through a partnership, you can submit your annual ITR12 Income Tax Return and provisional tax submissions yourself. However, a registered tax practitioner can help you ensure you’re compliant with SARS regulations and provide advice about reducing your tax bill by maximising the tax deductions you’re entitled to.
Look for a firm or a professional registered with recognised bodies such as The South African Institute of Professional Accountants (SAIPA) or the South African Institute of Chartered Accountants (SAICA), Southern African Institute for Business Accountants (SAIBA) or South African Institute of Tax (SAIT). Look for someone with good references and who has an established base of small business customers.
Know the deadlines
It would be best if you met some important deadlines each financial and tax year.
- You must file a compulsory provisional tax return six months from the start of the financial year and another at the end of the financial year.
- You may make a voluntary submission and top-up payment six months after year-end.
- You must file your annual return within one year of the end of your financial year.
Provisional taxpayers (sole proprietors)
- You must file one provisional return and make one tax payment by the end of August.
- A second provisional payment is due by the end of February (at the end of the tax season).
- You might make an optional third payment at the end of September if the amount paid in previous payments was insufficient.
- The tax filing season for provisional taxpayers usually begins in early June, with a deadline of 31 January.
- Submit the monthly EMP201 by the seventh of the following month or the Friday before if the seventh falls on a weekend or public holiday.
- File the interim EMP501 reconciliations for the period of 1 March to 31 August between 1 September and 31 October.
- File the annual EMP501 reconciliations for the period 1 March to 28 February between 1 April and 31 May.
- Manual submissions of the VAT201 and payment must be complete by the 25th of the month.
- Electronic submissions and payment of the VAT201 must be made by the last business day of the month.
Automate processes and keep electronic records
Many small business owners still use Excel spreadsheets and paper bank statements, bills and receipts to track their assets, liabilities, inventory, expenses and payments. This approach is time-consuming and prone to error, and it also means you may end up paying an accountant more to capture and reconcile your transactions in a proper accounting system.
You can save time and frustration for yourself and your accountant by capturing every transaction in an electronic accounting system as it takes place. A sound accounting system will make it easy for you to send invoices, track outstanding payments, and monitor expenses – today’s cloud-based solutions are easy to use and affordably priced on a monthly subscription.
Look for a solution that lets you import transactions from your bank account directly into the accounting software. This will make it easy to generate profit and loss statements when you need to file SARS submissions. An accounting and payroll solution developed for the local market will automate your payroll tax (EMP501, UIF and ETI) and VAT submissions.
Keep your submissions simple this Tax Year-End
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Editor’s note: This article has been updated for relevance