Starting a new business is exhilarating, as well as sometimes nerve-wrecking and without a doubt full of admin. This Life Business Solutions recognises that you need a steady grip on all aspects of your business in order to function optimally and see best results for all the efforts you are putting in.
While we strongly suggest that you work with a qualified accountant and tax consultant to manage your tax submissions, we recognise the need that you have as a business owner, to understand the small business tax cycle. Below we have a look at what you need to know about the tax cycle as a small business owner in South Africa. It’s important to be on top of all your submissions to avoid penalties and to help ensure that you qualify for a valid tax clearance certificate.
If you are drawing a salary from your business or paying staff, you need to complete a monthly EMP201 return for the business as well as make the relevant monthly payments to SARS. This is a fairly simple SARS process and often your accountant will show you how to complete it. You need to make sure that the EMP201’s are processed (filed and paid) before the 7th of the month and that all payments are made through your business banking account. It is important to know that should the 7th fall on a Saturday or a Sunday, the EMP201 return is then due for submission and payment by the close of business on the Friday beforehand. Alternatively, you can have your tax practitioner manage this SARS submission for you and you simply make the payment to SARS.
Due every 2 months
If you are a registered VAT vendor, a VAT201 must be filed and paid every 2 months where you fall into the A (odd months) or B (even months) VAT categories. The return must be filed and paid by the last business day of the month following the VAT period. It is important to know that should the last day of the month fall on a Saturday or a Sunday, the VAT201 return is then due for submission and payment by the close of business on the Friday beforehand. This link has information on alternate VAT categories.
Due twice a year
Provisional tax returns (IRP6 returns) are filed and payments made (where applicable) to SARS twice a year. Where you have a February year end, you will submit and pay every August and February. Where you have a December year end, you will submit and pay every June and December. According to Tax Tim, “An IRP6 is a Tax Return completed by provisional taxpayers, twice or (optionally) three times during the tax year to declare their income.” This is accompanied by a payment from your business to SARS.
Another bi-annual submission requirement is the EMP501 Employer Reconciliation for payroll taxes. This is submitted in October (for half SARS tax year from March to August) and again in May (for full SARS tax year from March to February). According to the SA Tax Guide website these have to be submitted to SARS before you can issue an IRP5 certificate for any of the business’ staff.
As Tax Tim explains, “an IRP5 is the employee’s tax certificate that is issued to him/her at the end of each tax year detailing all employer/employee related incomes, deductions and related taxes. It is used by the employee specifically to complete his/her income tax return in a specific year.” Your payroll administrator, accountant or tax practitioner will provide the business with all the IRP5 certificates once the annual (May) EMP501 submission is filed with SARS. It is the business’ responsibility to issue these certificates to each employee so that they have their certificate for the submission of their individual income tax return (ITR12).
Your CIPC renewal needs to be done annually in the month that you registered your business. Again, this can be done by your accountant who will provide you with a copy of the Annual Report emailed by CIPC. The fee is calculated on turnover and is paid on the CIPC website.
A business must prepare a set of Annual Financial Statements for each financial year end. The public interest score of your business together with the Memorandum of Incorporation, determines if the business requires Annual Financial Statements, Reviewed Annual Financial Statements or Audited Financial Statements. The Financial Statements should be prepared and finalised within a year of the financial year end, as they are required to complete and file the businesses Annual Income Tax Return (ITR14).
The business must file their income tax return (ITR14) within one year of there financial year end – where the financial year end is 28 February 2019, the income tax submission must be filed no later than 28 February 2020. Your annual financial statements comprise of the following:
- Statement of Financial Position
- Statement of Comprehensive Income
- Statement of Changes in Equity
- Statement of Cash flows
Lastly, don’t forget to do your individual TAX return (ITR12) due annually at the end of October.
Special thanks to Paula, a tax advisor and accountant, at PlusOne Financial Consulting for approving the above requirements. You can reach out to her at email@example.com for all your Small Business Tax and Accounting needs.