Taking a salary from company and tax

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TStringList

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Oct 24, 2014
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Hi guys,

I recently opened a one owner company and need some advice on how to take a salary to minimize tax of course.

A further question is when is the company liable to pay tax - is it only on the profit at the end of the financial year only?

Thanks, I am a dev trying trying to figure this financial stuff out :)
 
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newby_investor

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Aug 8, 2018
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Companies have to file taxes twice a year, August and February. To pay a "salary", you need to register to do so with SARS and pay over the taxes every month when you pay salaries.

What my wife does with her business is just "owner drawings", then she is registered herself as a provisional taxpayer. It works out a bit less hassle.

If you're in Cape Town area I can refer you to a competent accountant who specialises in small businesses and helped us out with this sort of thing. PM me.
 
T

TStringList

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Ah so it's twice a year. I just started now so I need to only pay in Feb for this term.

Ok so I still need to register with SARS and set aside PAYE tax as well.

Can I pay myself a non taxable salary?
 
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newby_investor

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TStringList said:
Ah so it's twice a year. I just started now so I need to only pay in Feb for this term.

Ok so I still need to register with SARS and set aside PAYE tax as well.
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Yeah, if you have any employees other than yourself. If you only pay yourself, you don't need to do the whole PAYE thing but you in your personal capacity must also file a tax return twice per year.

I seem to recall they have an optional third payment per year so that it's not such a big whack on the other two times but my wife's business doesn't make enough money to have to deal with that yet ;-) so I'm not quite sure.

TStringList said:
Can I pay myself a non taxable salary?
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Unfortunately not. You need to pay your taxes somehow. Unless you intend to keep it below ~R7000 per month, I forget what the exact number is, then you are technically exempt, unless you already have an income from another source in which case whatever you take out of your business will be taxed at whatever your marginal rate is.

You could pay dividends but then you need to do a dividends withholding tax of 20%.

My wife only pays herself a fairly modest salary, so she only ends up paying a few k in tax every year. The rest of the profits she keeps in the business so that she can reinvest and grow it. What you'll need to do will depend on your situation, we can get away with this because I have a normal job and a fairly okay salary which we use to live off of. Her money tends to be money for jam.
 
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