It’s that time of year again… Tax Season! We are here to help relieve the stress that comes with returns, IRP5s and the list goes on. Here we have a few tips that may assist you with the whole process – and by the time you’ve finished, tax won’t be as dreaded as it was before!
Record every cent earned or spent
Whilst it may sound like an absolute admin headache, keeping a record of your business’s income and expenses is critical to ensuring a smooth tax return. The nature and size of your business will determine whether you’d want to look at getting an accounting software or package to assist you. We can help there. Have a look at the products we offer here: EasyBiz Tech
Keep every slip and receipt
Keep all documents relating to income and expenses, such as invoices and receipts. Should SARS request verification on your business’s tax return, you’ll easily be able to supply these. No one wants to be rummaging through slips and papers from the past year – that takes up unnecessary time. Also, be sure to make copies of all your documents and receipts. You can either file them or keep them on cloud-based software.
Store documents for five years
Don’t toss away your documents once you’ve 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’t want to be missing vital documents that impact your business’ tax liability.
Use the correct rates for depreciation
If your business owns assets that devalue over time, be sure to use the correct wear and tear rate from SARS’ list of different asset types (see here: SARS). For example, computers depreciate at a different rate to vehicles. Be sure to also check whether your business qualifies for the Small Business Corporation or Section 12C Manufacturing Assets special wear and tear allowance.
Know all the allowed deductions
There are numerous deductions and allowances available to SMEs. It is advisable to familiarise yourself with them in order to ensure you never pay more tax for your business than necessary. Also, bear in mind, 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’s tax calculation as these are only deductible for tax once they’ve been paid.
Keeping these tips in mind should make tax season a breeze for you and your company. Just make sure you are organised, keep everything throughout the year and make sure that you understand the SARS requirements and legislation – and you’re good to go!
If you need some tips for your individual tax returns or need a better understanding of the tax season, have a look at our previous blog: Tax Season For Beginners