Tax compliance can get tricky, with all the relevant dates, various applicable taxes and rules to remember, it can be a bit challenging. For those of you running small to medium sized entities, you probably already feel like you have so much to remember. So, to help you out, here are a few tips to assist you in keeping what’s important at top of mind.
Create a tax calendar
The last thing you need is to miss an important date and incur penalties on returns and payments that are outstanding. SARS has simplified this for taxpayers by creating a list of important dates and a tax calendar which includes all taxpayers on their website. Creating or even purchasing a year planner that is easily accessible and visible for the relevant members of your team, then populating it with important dates will assist in not missing critical deadlines.
Know the basics
So, what does “know the basics” mean? As an SME, it is vital that you know the types of taxes that are applicable to your business and what you are liable to pay over to SARS as well as returns to be completed.
Have you registered for VAT (Value Added Tax) making you a VAT registered vendor? If so, are you submitting your VAT returns monthly or bi-monthly?
Do you have people in your employment and therefore does PAYE (Pay As You Earn), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levy) apply to you?
What are the rates of taxes applicable to your business? It is important to know the applicable tax rates so that you’re able to make informed projections and estimates for your business regarding the amounts of taxes that you will be liable to pay over to SARS. This will assist you in terms of your cash flow forecasts and ensuring that you will have enough cash on hand to pay over to SARS when the time comes.
There are various deductions, provisions and rebates available to SMEs, some to all SMEs and in some cases, these vary from industry to industry. Do your research and apply these to your business to give your business an advantage.
All this might seem slightly complicated and overwhelming, in which case you can get a tax professional to assist you with ensuring that the basics are adhered to.
Are you VAT compliant?
I mentioned VAT already under “know your basics”. Keep in mind that should your turnover exceed R1 million, it is compulsory to be a VAT registered vendor. However, you do have the option to register to submit VAT returns monthly or bi-monthly. Considering how cash flow projections and forecasts are of importance to every business, especially SMEs, consider the payment cycle of your debtors and your creditors in deciding whether the monthly or bi-monthly option will work for your business.
Maintain a filing system
Ensuring that all relevant documentation is maintained in a logical and simplified filing system is important. This is not only of importance when it comes to completing and filing your returns; but it’s also important to maintain important documentation as SARS may request proof for certain expenditure that’s been claimed and deducted as per the return submitted. Maintaining a logical and simple filing system will ensure that documents can be accessed and submitted easily. Another tip would be to save all this documentation on a cloud system for safekeeping and easy access.
Maintain accounting records
For those of you who have submitted returns without some sort of accounting system in place, you all know the difficulty and the number of unnecessary hours you’ve spent trying to “put” your numbers together. Unnecessary you might wonder? Well, yes, unnecessary because this is avoidable by implementing a simple but logical bookkeeping process and maintaining accounting records and documentation (as highlighted above). This will simplify completing and submitting returns, as well as just having the records on hand should SARS request these from you.
Again, all this might seem like it adds to the pile of work that you already have; in which case hire a professional or purchase a simple accounting system and get training to maintain your day-to-day records yourself.
Submit your forms
Lastly, but of importance is to submit your forms. Whether it be annual returns, VAT, PAYE, UIF or even SDL-submit the relevant forms as SARS views the failure to submit these as a criminal act.
These are not the only things that can do to simplify dealing with your taxes, but these will assist you in ensuring that your business remains tax compliant.
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