With the many challenges small business owners face every day, being tax compliant is often not at the top of the list and tax deadlines often come and go in the struggle of trying to keep the business afloat.<\/p>\n
When they do get around to completing their tax returns, they often go it alone, often not realising that business tax returns are far more complicated than individual returns.<\/p>\n
Research conducted by TaxTim shows that 58% of small businesses do not get professional help when submitting their annual tax returns. In fact, only 13% handed the role over to an outsourced professional.<\/p>\n
Marc Sevitz, co-founder and CFO of the online tax return tool TaxTim, says that SMEs do not have one standard deadline for submission to SARS.<\/p>\n
SMEs must complete their annual tax returns within 12 months of the end of their financial year, which can be any time from January to December.<\/p>\n
Sevitz, a Chartered Accountant and registered tax practitioner, offers TaxTim\u2019s top tax tips for SMEs:<\/p>\n
1.\u00a0\u00a0\u00a0\u00a0\u00a0 Record every cent earned or spent<\/strong><\/p>\n Whilst it may sound like an administrative headache, keeping an accurate and up-to-date record of your business\u2019s income and expenses, allocated to their various categories, is critical to ensuring a smooth tax return. The nature and size of your business will determine whether you\u2019d want to look at investing in an accounting software or package, or if a basic spreadsheet record will suffice.<\/p>\n 2.\u00a0\u00a0\u00a0\u00a0\u00a0 Keep all your slips<\/strong><\/p>\n Keep all documents relating to income and expenses, such as invoices and receipts, and file them in a logical order. Should SARS request verification on your business\u2019s tax return, you\u2019ll easily be able to supply these. Scrambling around to find slips from the past year can easily be avoided.<\/p>\n 3.\u00a0\u00a0\u00a0\u00a0\u00a0 Make copies of documents<\/strong><\/p>\n It\u2019s best to keep both a hard copy and electronic version of documents. Scanned copies can be stored online using cloud services like Google Drive or Dropbox, which ensures they\u2019re safe, even if the originals get lost or if your computer is damaged or stolen.<\/p>\n 4.\u00a0\u00a0\u00a0\u00a0\u00a0 Store documents for five years<\/strong><\/p>\n Don\u2019t toss away your documents once you\u2019ve filed your business tax return. Legislation requires that SMEs keep all relevant documents for a minimum of five years. SARS may request a review of previous tax returns and you don\u2019t want to be missing vital documents that impact your business\u2019s tax liability.<\/p>\n 5.\u00a0\u00a0\u00a0\u00a0\u00a0 Use the correct rates for depreciation<\/strong><\/p>\n If your business owns assets that devalue over time, be sure to use the correct wear and tear rate from SARS\u2019 list of different asset types. For example, computers depreciate at a different rate to vehicles. Also, check whether your business qualifies for the Small Business Corporation or Section 12C Manufacturing Assets special wear and tear allowance.<\/p>\n 6.\u00a0\u00a0\u00a0\u00a0\u00a0 Know all the allowed deductions<\/strong><\/p>\n There are numerous deductions and allowances available to SMEs. It is in your best interest to familiarise yourself with them to ensure you never pay more tax for your business than necessary. For example, a business can claim an allowance for a building that it owns, or special tax deductions for leased assets.<\/p>\n 7.\u00a0\u00a0\u00a0\u00a0\u00a0 Provide properly for provisions<\/strong><\/p>\n Remember that accounting provisions are treated differently for tax purposes. Ensure you reverse the Provision for Leave Pay and Provision for Employee Bonuses in your business\u2019s tax calculation as these are only deductible for tax once they\u2019ve been paid.<\/p>\n
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