Written by: Johann Barnard
It’s that time of the year again – financial year-end, which means scrambling to get your business accounts in order and to prepare to file and pay over tax on profits to SARS.
Jonathan Marshall, a chartered accountant with TSL Corporate Administrators that specialises in small business accounting, says that while this time is generally considered the high point in the financial year, ignoring all the other business taxes is looking for trouble.
“The penalty for late payments on all taxes is 10% of what is owed, and interest is calculated from day one at around 9%,” he says. “So, falling behind on your tax matters can become an expensive affair very quickly.”
Jonathan offers the following advice to make sure you don’t fall foul of the tax authorities:
1. Stay on top of you tax affairs
SARS has become very stringent on the correct and timely filing and payment of various taxes.
The most common taxes paid to SARS are for employee salaries – the Pay as You Earn (PAYE) tax – and Value Added Tax (VAT). In addition, business owners are likely to be registered for Provisional Tax, which they have to submit twice a year.
To add to the complexity, these submissions and payments fall on different days in the month. Fortunately, SARS has made it easier to keep track of these dates with this list of dates for the 2015 calendar year.
2. Trust in e-Filing
One of the other ways SARS has simplified matters is the online submission and payment of taxes.
This can be accessed by you as the business owner, your in-house accountant or tax practitioner.
Jonathan warns that it is best to keep an eye on activity on e-Filing from SARS. This relates specifically to communication on the system regarding queries or notices as SARS has implemented a response deadline on all such communication – typically 21 days. If you fail to respond appropriately you could find yourself at the short end of the stick.
Value-added Tax can seem an obligation because the filing and payment happens every second month (if you generate less than R30 million per year) or every month if you are above that threshold.
Businesses generating more than R50 000 per year can register voluntarily.
The benefit is that you can claim back VAT on business input costs, which makes sense for a business buying goods or material that is resold or used in production, but less so when you are in the service industry.
4. Records management
It is a legal requirement that companies retain their records for 10 years – 15 years in the case of Close Corporations. Also be aware that SARS can request records that go back 10 years.
Pleading innocence on this is unlikely to win the favour of the tax authorities and probably even less sympathy.
Jonathan concludes that constant attention to your tax matters is an imperative if you wish to operate legally, and without incurring penalties and interest. Doing so also helps if you tender for business as one of the requirements is a tax clearance certificate.
If staying on top of matters is taking your eye of the ball in terms of running your business, it pays to outsource this to a tax or accounting expert who will be able to keep you in the clear.