Part-time business: Things to think about

[techedemic]

Hi all,

I do some part time work, including software development, websites, some hosting, support, etc..
I might also start a small specialised online store at some point.

At the moment, any income/expenses is paid directly to my personal bank account and I don't have registered business. This means I need to declare it as part of my income tax and in my current tax bracket, I lose a large chunk of the money to SARS.

My turnover is <R75k per year at the moment but I want to aggressively increase this in coming months to (hopefully) get to a point where I can do it full time as opposed to part-time. My plan is to have 6 months+ of my current full-time salary saved and regular business on the horizon before resigning and doing it full-time. How and what I will do to increase my turnover is beyond the scope of this post

I'm trying to decide on the following:

1. At what point to you decide to register a business? The banks make this easy as part of their business banking sign-up process so I can do it 'now' if I want to...but...
2. What are the requirements regarding auditing for a small business? And the costs (ballpark)?
3. Does the business have to be registered for VAT? If not, at what point do you? What are the tax/auditing implications?

I find all the information online a bit confusing so some experienced entrepreneurial input would be appreciated.

Thanks

 

[RedViking]

Sorry I know this doesn't answer your questions, but why don't you consider doing 'n business course through Unisa or somewhere?

I just started a Higher Certificate in business and economics and find the information very helpful for someone with no business background. You learn the basics off accounting, business, business plans, VAT and SARS.

 

[techedemic]

Sorry I know this doesn't answer your questions, but why don't you consider doing 'n business course through Unisa or somewhere?

I just started a Higher Certificate in business and economics and find the information very helpful for someone with no business background. You learn the basics off accounting, business, business plans, VAT and SARS.

Thanks I will certainly look into that...

 

[Tikkop]

Hi all,

I do some part time work, including software development, websites, some hosting, support, etc..
I might also start a small specialised online store at some point.

At the moment, any income/expenses is paid directly to my personal bank account and I don't have registered business. This means I need to declare it as part of my income tax and in my current tax bracket, I lose a large chunk of the money to SARS.

My turnover is <R75k per year at the moment but I want to aggressively increase this in coming months to (hopefully) get to a point where I can do it full time as opposed to part-time. My plan is to have 6 months+ of my current full-time salary saved and regular business on the horizon before resigning and doing it full-time. How and what I will do to increase my turnover is beyond the scope of this post

I'm trying to decide on the following:

1. At what point to you decide to register a business? The banks make this easy as part of their business banking sign-up process so I can do it 'now' if I want to...but...
2. What are the requirements regarding auditing for a small business? And the costs (ballpark)?
3. Does the business have to be registered for VAT? If not, at what point do you? What are the tax/auditing implications?

I find all the information online a bit confusing so some experienced entrepreneurial input would be appreciated.

Thanks

Register a company as soon as possible and operate through it. Your company will qualify as a small business corporation and it will only start paying tax on a profit/taxable income of R75,750 and more.

Or you could register for turnover tax and only be taxed when your turnover/revenue reaches R335,000 per year. http://www.sars.gov.za/TaxTypes/TT/Pages/default.aspx

Your business is small, so it won't require an audit or an independent review. Just get an accounting officer to compile the AFS yearly.

Compulsory registration for VAT starts at R1mil (vatable) turnover a year (or more precisely any continuous 12 months). Voluntary registration starts at R50,000 over 12 months.