Starting a small business - PAYE vs VAT vendor

[WBA]

Hi All,

Gonna be starting a small business soon (whilst working a 'normal' full time PAYE day job for a company). Income expected to only be a few thousand if not a few hundred a month.
Big growth is possible, but hard to tell right now.

My Q is, should I just submit the additional income (profit only) in my annual PAYE tax return or register a voluntary VAT vendor;
Which will be leave me with more money (I am looking at 30% tax on both incomes according to this:
http://www.sars.gov.za/TaxTypes/PIT/Pages/Income-from-two-sources.aspx )

 

[Beachless]

If you trade as a sole proprietor you just add it to your normal income and pay tax on the whole(as if you earn one salary). You should only really register for VAT if it will be of benefit to you or you reach the mandatory VAT registration value.
Just note that you dont have protection if someone sues you as a sole proprietor as you are liable. If you have a PTY you have more protection in your personal capacity but you will need auditors etc.

Its best really to speak to an accountant who can explain all the benefits and risks of each which I am not.

 

[initroot]

Why register for VAT then except if you meet the requirements or indeed have enough deductions that would justify it?
You will have to submit your income with your regular returns, for your personal income tax.
If you where to INC yourself then you would submit the additional income within your company, and if under the tax bracket, you would not be taxed according to the tax table. If it's only yourself try to set-up as independent contractor between yourself and the new inc.
This holds many benefits eg. credit loan account, term loan, debt swap.. your salary are also only declared a year later.
There is much more benefits to this but would defeat the purpose of your question which I believe is really simple.

You are clearly mistaking the difference between PAYE and VAT here.

Your however stating that it would only be few hundred or few thousand, considering the difference between few hundred and few thousand I'm assuming it wouldn't be more than 15 000 a year.
This doesn't justify registering a separate entity yet and you should just declare this amount. If you do feel that you might not be able to pay the payable amount in the when your return is due, you should register for provisional tax.
http://www.sars.gov.za/TaxTypes/PT/Pages/default.aspx

 

[Frikkenator]

Why register for VAT then except if you meet the requirements or indeed have enough deductions that would justify it?
You will have to submit your income with your regular returns, for your personal income tax.
If you where to INC yourself then you would submit the additional income within your company, and if under the tax bracket, you would not be taxed according to the tax table. If it's only yourself try to set-up as independent contractor between yourself and the new inc.
This holds many benefits eg. credit loan account, term loan, debt swap.. your salary are also only declared a year later.
There is much more benefits to this but would defeat the purpose of your question which I believe is really simple.

You are clearly mistaking the difference between PAYE and VAT here.

Your however stating that it would only be few hundred or few thousand, considering the difference between few hundred and few thousand I'm assuming it wouldn't be more than 15 000 a year.
This doesn't justify registering a separate entity yet and you should just declare this amount. If you do feel that you might not be able to pay the payable amount in the when your return is due, you should register for provisional tax.
http://www.sars.gov.za/TaxTypes/PT/Pages/default.aspx

This is why, when starting a new company the first thing you do is to get an accountant.