Presented by Xero

Tax experts offer their top tips for small businesses this tax season

 ·8 Apr 2024

Filing taxes remains one of the biggest pain points for small businesses in South Africa.

Tax obligations can be difficult to navigate, making tax time a stressful process for many.

SARS is making good progress towards making it easier to comply, but there is still a huge gap between the number of SMEs and those paying taxes.

Using technology to build good habits throughout the year, and working with an accountant or bookkeeper can make tax less of a chore.

We know many small businesses are facing a myriad of challenges, so it’s a good idea to get things in order well ahead of the tax filing season this year.

Xero has put together a group of tax experts – The Xero Tax Task Force – to offer advice to small businesses and help them get into good habits to make tax compliance easier.

Starting with the basics: Understanding tax commitments

Siyabonga Buthelezi, Managing Director, Outsourced Finance – a Xero accounting partner firm says:

“Clients are always looking for the best advice in helping them decrease their tax liability, and as their accountants it is our job to understand the nature of their business in order to provide them with the best advice.”

“As part of our tax budgeting, we work closely with our clients to draw them a reasonable picture of what their tax commitments for the year will be. Then we can advise them on how best to navigate and prepare for these.”

Getting into good habits to make tax less stressful

Pieter Faber, Executive: Taxation, SAICA, says:

“Make sure you have a basic understanding of the taxes you are liable for, the compliance periods and payment periods, and the tax allowances/benefits that your business could claim. “

“Simple things like setting a reminder on your phone for these dates and when you have to provide documents and financial information to your accountant or tax practitioner, can help you prepare.”

“Setting aside your tax money monthly (including withheld monies such as VAT and payroll taxes), even in a separate account if you have to, can help ensure you don’t use your tax money as working capital. Tax penalties and interest are extremely punitive on cash flow, so should be avoided as much as possible.”

“Try to file your tax documents daily and keep your tax records filed chronologically – you can add a corresponding tracking number on each document, e.g. based on date, and insert it on your accounting system to make it easier for you to find records. “

“This should be done in an orderly fashion so they are easy to access for SARS purposes but also easier to hand over to your accountant.”

Sue van der Valk, Audit Partner, MGI Bass Gordon, a Xero accounting partner says:

“Check tax compliance status on a regular basis – ask your tax practitioner to send this through regularly. Don’t leave tax obligations to the last minute and run the risk of unnecessary penalties and interest.”

“As well as working with an advisor, try and keep up to date on tax updates. For example – through news articles, particularly those which may impact specific industries.”

How technology can help in the lead up to tax time

Siyabonga Buthelezi, Managing Director, Outsourced Finance – a Xero accounting partner firm says:

Having all your financial data in a cloud-based system provides small businesses with real-time insights that enable them to make more informed business decisions.

It also provides secure remote access, which means business owners can quickly get up-to-date information on their business no matter where they are.

In addition, cloud technology scales with your business, so you can ensure your financial management keeps pace with your ambitions and growth.

Pieter Faber, Executive: Taxation, SAICA, says:

“Using cloud technology to keep track of your finances makes it easier and faster to access historical data and records to provide to SARS and other service providers. Business owners can end up spending a lot of time searching for documents retrospectively if they are not stored digitally.”

“Having access to real-time financial data and records, whether you are at clients, on a job site, on the road or even on holiday, allows business owners to make timely and data-driven decisions around cash flow. It also means they can work with their advisor to plan ahead.”

To find out more about how Xero can help make tax time less stressful, visit the Xero website, where you can also find a directory of advisors to help you.

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