Tax Query - SME

F

fordguy

Well-Known Member
Joined
May 31, 2010
Messages
129
Reaction score
1
Location
CT
I am registered for tax in my personal capacity. I have run my own SME for almost a year now with total revenue around R120,000 ALL going into MY bank account.

The business is too small to register for VAT but now i'm scared SARS is going to come after me due to all the money that's been pumped into my bank account over the last year (apparently they monitor your bank account like Big Brother)

How can i ensure, through Efiling, that they don't come and suck me dry??? SHOUT!!
 
I just received the money, because it is a small sideline business, and spent the money on stock etc and company expenses.

No paying of tax or anything other than obvious VAT when buying stuff
 
Thats what i need clarity on. i am going to submit my tax returns NOW but im not sure how to include this new income in such a way that they don't empty my account
 
fordguy said:
The business is too small to register for VAT but now i'm scared SARS is going to come after me due to all the money that's been pumped into my bank account over the last year (apparently they monitor your bank account like Big Brother)
Click to expand...

They don't.

Do you have accounts/profit or loss statements for your business? The money flowing in is irrelevant, that's turnover. What is relevant is the profit. That's what gets taxed (I'm simplifying, but that's the gist of it) .

It seems that you are running the business in your own name - therefor it must be disclosed in your personal tax return. But before you get worked up, first calculate whether you made a profit or not.
 
They don't monitor your bank account that closely but they *will* nail you (or at least audit you) if your assets have increased without any declared income to account for it.

Best bet is to calculate your net profit from your side business and declare that, and pray they don't audit you. Claiming business expenses in a personal capacity can be rather tricky.
 
Well my assets haven't really increased. I've made roughly R75,000 profit in the year, but of course iv paid myself and my employees so iv only got about R20,000 left.
But you say claiming expenses in a personal capacity is tricky. So i declare R75000 additional income on top of my regular salary which i already pay tax on. So they gonna nail me for the R75000? Any idea how much??
 
fordguy said:
Well my assets haven't really increased. I've made roughly R75,000 profit in the year, but of course iv paid myself and my employees so iv only got about R20,000 left.
But you say claiming expenses in a personal capacity is tricky. So i declare R75000 additional income on top of my regular salary which i already pay tax on. So they gonna nail me for the R75000? Any idea how much??
Click to expand...

First to a profit/loss so we can understand the facts. What you pay yourself is irrelevant - you, your business, it is ONE TAX ENTITY. Salaries to employees are deductible. What's the profit then?

For an easy approximate calculation of additional tax, look at the 2011/2010 tax table and see where you fall on the progressive scale. Use that % times your profit to guesstimate the additional tax liability.

Of course there may be provisional tax issues...
 
Total Income: R124612.00
Total Expenses: R42345.00
Salaries: R65,000
Balance 21/07/10: R17267
Balance 31/08/10: R2267

At the end of this month, the profit remaining will be R17,267. But R15000 of that will be gone next month to salaries. So if i submit next month and i have only R2267 profit left over, does that mean my tax burden is gone?

Remember this for Small Informal business
 
fordguy said:
Total Income: R124612.00
Total Expenses: R42345.00
Salaries: R65,000
Balance 21/07/10: R17267
Balance 31/08/10: R2267



At the end of this month, the profit remaining will be R17,267. But R15000 of that will be gone next month to salaries. So if i submit next month and i have only R2267 profit left over, does that mean my tax burden is gone?

Remember this for Small Informal business
Click to expand...


no you need to do a proper profit and loss statemtent or income and expenditure statement. all you are looking at here are salaries. what are you phone, cell phone, depreciation on assets, any business travel, stationery, staff things e.g. coffee etc, bank charges, rent - on rent you could possibly be trading from home and therefore can claim home office space. can't think of anything else at the moment.
once you have figured out what the income and expenditure is only then can you get an exact figure and you may even get to a loss. don't only look at money.
 
fordguy said:
Total Income: R124612.00
Total Expenses: R42345.00
Salaries: R65,000
Balance 21/07/10: R17267
Balance 31/08/10: R2267

At the end of this month, the profit remaining will be R17,267. But R15000 of that will be gone next month to salaries. So if i submit next month and i have only R2267 profit left over, does that mean my tax burden is gone?

Remember this for Small Informal business
Click to expand...

I'm generalising here, but your taxable income is small enough that I won't worry too much about it. You obviously have to declare the income/expenses in your personal tax return - for the period from 1 Mar to 28 Feb. Lacking more information, to be safe, I'd provide for 25% of your cumulative profit for the year-to-date for tax (assuming you earn a salary also - if you provide that details it's easier to guess the %).

The situation can obviously change if your income/expenses drastically change during the next few months.

For the 2010 tax return it will obviously only included details from 1 Mar 09 to 28 Feb 10. I can't see from your figures what that profit is.

Alternatively, Small Business Tax may apply, whereby you pay tax on your turnover. The first R100,000 is exempt and from there progressively more. I don't have much experience with it, so maybe someone else can chime in with more details.

I don't think you qualify for a Small Business Corporation in terms of the discounted corporate income tax rates that exists (for 2010 in any case).

You probably have to register as an employer too for PAYE purposes. I'm not sure if there are exemptions in the Act.

Sorry, I probably causing more questions than answers. :p There are other people here that are able to fill in the blanks.

My advice is always to have a consultation with a tax accountant/consultant - with all the details they'll be able to sort your queries out in no time.
 
Celine said:
no you need to do a proper profit and loss statemtent or income and expenditure statement. all you are looking at here are salaries. what are you phone, cell phone, depreciation on assets, any business travel, stationery, staff things e.g. coffee etc, bank charges, rent - on rent you could possibly be trading from home and therefore can claim home office space. can't think of anything else at the moment.
once you have figured out what the income and expenditure is only then can you get an exact figure and you may even get to a loss. don't only look at money.
Click to expand...

Ditto. Get an accountant, or even a friend that understands accounting, to help you. That's the most important part, having a detailed profit/loss account.
 
Run forest run, in SA the offence has higher penalty than murder - ironic in the murder capital of the world!!1
 
If you are employing staff you should have registered for UIF and Workmans Compensation, as well as with SARS for PAYE.
 
No. Tax returns run till the 28th of Feb and they will assess you based on whatever your profit for the year was ending on that date.
 
Just my 2c. Remember we are talking for the period of 1 March 2009 to 28 feb 2010. The OP is talking about funds for the entire 2010. So, the right thing would be to get legal for the next year's assesment, or it buys you time to make a plan. Either way, i wouldn't stress about it. I think you are one of millions of people who don't disclose eveything. If you can't beat them...
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X