FOR many small business owners, this week will be dedicated to checking under couch cushions and breaking open piggy banks in an effort to pay the second provisional tax due next week. With the past year being such a disrupted one – both financially and in every other way imaginable – tax commitments may have taken a bit of a backseat.
To ensure your next February is not quite as stressful, here are 5 handy tips for business owners to keep on top of tax requirements.
1. Record all finances monthly
Instead of scrambling to work out your annual income and expenses, set aside time every month to update your books by tallying these amounts. Not only does this help you come the end of the financial year, it also makes good business sense. This way, you’re able to quickly identify areas of overspending and rectify them accordingly. For smaller businesses, this can be recorded on a basic Excel spreadsheet, whereas medium-sized enterprises could invest in accounting software.
2. Retain all your slips
If SARS comes knocking, you need to back up your expense’s column with proof in the form of receipts. Get a filing system in place where you can store these in some form of logical order. This makes it easier to work out your monthly costs as well.
3. Consider the deductibles
The arrival of Covid-19 completely shifted the work space with many people now opting to work from home. Remember that if you work from home, you can factor in certain items which are tax-deductible because they’re part of your business operations. These will include:
* Rent or bond on a building
* Office equipment
* Maintenance and cleaning
* Travelling expenses
* Entertainment expenses
4. Keep those files
Make sure you have both hard and soft copies of all work-related documentation and store this on a cloud-based service or an external hard drive. Remember that you also have to keep all your documents for a minimum of five years in case SARS requests them during an audit.
5. Get professional help
Don’t cut costs by trying to do all your taxes yourself as you’re likely to make a mistake, and pay a hefty penalty in the process. Some things are simply worth spending money on, and an accountant is one of those things. This is particularly true for new businesses that haven’t navigated SARS’ requirements before. An accountant will advise you on how much to put away, the type of tax you’ll pay, the deadlines and supporting documents needed. Another benefit of seeking professional assistance is that you aren’t taking valuable time away from business operations by focusing solely on tax.
For more information about South African tax, visit www.sars.gov.za
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