Your Second Income!

[saturnz]

Taxation and a second income is an interesting concept. How many are declaring their second incomes?

when I was working I declared my second income simply to get as much tax deductions as possible.

 

[LottaFun]

Taxation, really, that is your concern. You don't have a second business yet and already you are looking for possible stumbling blocks?

You won't succeed if that is your starting point. Bugger the bloody tax! I would say getting some capital together might be a stumbling block. Doing research is definitely not a stumbling block. So actually you have no stumbling blocks to complete the first part of your product investigation.

 

[LottaFun]

Oh no. Why did this thread hit a wall? Are you guys not interested in a second income anymore?

Let me tell you my experience so far.

Took 50k and went to Thailand. Did an investigation and bought some stock. Came back and sold that stock. Went Back. Bought some more stock. Sold it all again. Just came back from my 3 rd trip with my summer stock. Started at 1 market. Now I do 18 market days a month and have two people that help to cover all the markets. What use to be an extra R5000 a month is now an extra 36K per month.
As an extra I do festivals also and just came back from Aardklop at Potchefstroom. It was great! I'm the only person that can say I went on a "holiday" and came back with more money than what I spend.

I didn't listen to other people. I kept my mind open and did not let stumbling blocks prevent me from moving forward. And now on top of everything, I am ready to open other business that are spinoff's from my original business.

Guys please, investigate your idea. Don't let it die. Write it down. Investigate everything that you have written down. Don't listen to the those that are negative. Move forward and good luck.

Oh and by the way, my business as I explained on the previous page, is 90% after hours (evenings, Saturday and Sundays). Only the festivals fall in day time. So you have no excuse by stating that you have to work. You can either lazy around on a Saturday and struggle along financially or you can use that time to create your second income.

 

[Thor]

Taxation, really, that is your concern. You don't have a second business yet and already you are looking for possible stumbling blocks?

You won't succeed if that is your starting point. Bugger the bloody tax! I would say getting some capital together might be a stumbling block. Doing research is definitely not a stumbling block. So actually you have no stumbling blocks to complete the first part of your product investigation.

I'd say TAX is a major concern. I hope you declare yours otherwise this attempt to give advice would not be so credible as you want it to be.

 

[Hamster]

I want to launch an Uber type app for men to find escorts to hook up with, and then provide a transparency feedback/review service to either recommend the girls or to avoid them if they are dodgy. Also a warning system for these women to blacklist dodgy clients. I'll charge a subscription to both users and providers. Any developers want to work on this with me, send me a PM?

It's already been done

 

[Hamster]

Taxation, really, that is your concern. You don't have a second business yet and already you are looking for possible stumbling blocks?

You won't succeed if that is your starting point. Bugger the bloody tax! I would say getting some capital together might be a stumbling block. Doing research is definitely not a stumbling block. So actually you have no stumbling blocks to complete the first part of your product investigation.

Tax is an important question and should be part of your research unless you want SARS as your very upset business partner.

Doesn't a second income classify you as a provisional tax payer?

 

[heartbroken]

I'd say TAX is a major concern. I hope you declare yours otherwise this attempt to give advice would not be so credible as you want it to be.

You are going arse over head here. You first need an extra income to be able to declare to SARS, so start with that. No income = no tax. Work on your idea, market and sell! Just keep an accurate record of your income and expenses and then sort out the tax afterwards.

 

[Thor]

You are going arse over head here. You first need an extra income to be able to declare to SARS, so start with that. No income = no tax. Work on your idea, market and sell! Just keep an accurate record of your income and expenses and then sort out the tax afterwards.

That's better

 

[mintydroid]

You are going arse over head here. You first need an extra income to be able to declare to SARS, so start with that. No income = no tax. Work on your idea, market and sell! Just keep an accurate record of your income and expenses and then sort out the tax afterwards.

The tax needs to be planned as well. Just as important as the income generating idea. Additional income will be taxed at the individuals marginal rate and the combined incomes might even move up a tax bracket.

Don't want to be caught for tax avoidance by SARS especially when a disgruntled customer or family member reports the sideline business. I've seen people in my community get caught for this.

 

[LottaFun]

You are going arse over head here. You first need an extra income to be able to declare to SARS, so start with that. No income = no tax. Work on your idea, market and sell! Just keep an accurate record of your income and expenses and then sort out the tax afterwards.

Exactly!!!

 

[LottaFun]

Help me with this. Is your first R120 000 not non taxable in a business? Would you start a second income under your own name or register a business? If I'm right that = 10 grand a month.

The sad thing is, your comments about tax just made 1000 guys with ideas drop it like a stone. How sad is that? They didn't even get one foot out the front door.

 

[mintydroid]

Help me with this. Is your first R120 000 not non taxable in a business? Would you start a second income under your own name or register a business? If I'm right that = 10 grand a month.

There are special micro and small business classifications which pay zero tax on revenue in certain cases. Look them up on SARS.

If you're drawing R10k salary a month for example your personal income is affected. The extra R120k gets added to your taxable income.

 

[LottaFun]

The tax needs to be planned as well. Just as important as the income generating idea. Additional income will be taxed at the individuals marginal rate and the combined incomes might even move up a tax bracket.

Don't want to be caught for tax avoidance by SARS especially when a disgruntled customer or family member reports the sideline business. I've seen people in my community get caught for this.

Do you know of anybody that generates a second income under their own name so they can pay max tax and fall in a higher tax bracket? Guys surely nobody is that dumb. Everybody knows that companies pay far less tax than the individual and that you can subtract every possible expenditure that you have in generating that income.

 

[LottaFun]

But enough said about tax. Tax is step 999 in the process. You have not even started with step 1 and that is to document your idea.

I wonder if Mark Zuckerberg would have started Facebook if tax was his main concern?
Think about it.
Does Facebook give you something to eat?
Does Facebook generate income and give you money every week?
What does Facebook do for you except connect you to other people and allow you to document your life?

Would you have told Mark that he is crazy when he stated that he is going to start a company called Facebook and that is what it's going to do?

 

[Deleted member 83147]

Everybody knows that companies pay far less tax than the individual and that you can subtract every possible expenditure that you have in generating that income.

The first part is not necessarily true. The second is blatantly wrong.

Those statements shows a complete lack of understanding of the Income Tax Act. Please don't makes statements about matters you are not competent in.

 

[Deleted member 83147]

The tax needs to be planned as well. Just as important as the income generating idea. Additional income will be taxed at the individuals marginal rate and the combined incomes might even move up a tax bracket.

Don't want to be caught for tax avoidance by SARS especially when a disgruntled customer or family member reports the sideline business. I've seen people in my community get caught for this.

PLEASE, listen to this man. He's providing good information.

Some statements have been made about the tax effects here that are at best, not optimal and at worst simply horrendously bad.

We all agree that your idea, marketing, etc is important. No one is disputing this. But setting up the correct type of business (and hence the tax effects that this will cause) is equally important.

Ask others (that actually know WTF they're talking about) or pay for professional advice if you need to, but don't under estimate the importance of setting up an appropriate type of business for your venture.

Setting up an SBC not only means you'll pay less tax than a normal company, but entitles you to much more favorable capital allowances for example. This will make a huge difference if your business is capital intensive (manufacturing).

Trading in your own name can be very favorable tax wise if you don't already have a primary income, but it does not give you the protection of limited liability to third parties that trading through a separate legal entity (like a company) would.

 

[LottaFun]

I never stated that I was a tax expert. I stated that it is number 999 in the process and that worrying about the tax implications is a real initiative killer. I don't see tax as a stumbling block in the process to start a business. As you stated, pay someone else to do that component and get on with your idea.

 

[LottaFun]

What a buzz killer. If 1000 people didn't drop their idea's by now, this post will really kill the other 5000 that had ideas.

 

[Deleted member 83147]

I never stated that I was a tax expert. I stated that it is number 999 in the process and that worrying about the tax implications is a real initiative killer. I don't see tax as a stumbling block in the process to start a business. As you stated, pay someone else to do that component and get on with your idea.

What a buzz killer. If 1000 people didn't drop their idea's by now, this post will really kill the other 5000 that had ideas.

I don't recall anyone saying tax is a stumbling block. If it is, you're doing something wrong. Tax as a general rule is paid on "profit". No "profit", no tax. No business, no "profit". I'm clearly over simplifying the way tax works here.

I don't see why talking about the tax effects is a buzz kill. I assume it's because you don't understand the importance of it. If I were someone that we're going to start a venture to create a second income I'd be very interested in structuring my business in such a way that I would pay the least tax legally possible, or at least be as tax efficient as I can be.

Let's use an example to illustrate the point: You're gonna sell food at a market on the weekends as a second income. You're on MyBB and you earn a decent salary as it is. You don't worry about setting up a separate business or the tax effects (coz it's such a buzz kill, you're here to make money) so you trade in your own name.

Say you do this for a year and you make R50 000 "profit". You declare this as your secondary income, and because you earn well from your primary job (you are in the top marginal tax bracket) this additional income is taxed at 41%. That means you're paying R20 500 income tax on that secondary income.

Now if you were a bit smarter and set up your food stall as an SBC, you would have paid exactly R0 in tax on that R50 000 profit (as your taxable income is less than R63 556).

That's a difference of R20 500 cash in your hand that you could keep or hand over to SARS. The difference between buying that new 55" 4K TV and seeing that hard eared money go to the government to be "used inefficiently" was a tiny bit of planning and research, maybe a bit of help here and there as well.

So no, planning your venture properly is not a buzz kill. Paying significantly more in tax than you need to, that's a buzz kill.

Just one more thing, if these people (no idea who you're talking about anyway) dropped their ideas just because of this, how far do you think they'll make it as entrepreneurs? Owning your own business is one of the most challenging things one can do, it's not for the weak. If these people give up so easily, they are bound for failure not only in their business but for life in general.

I don't want to end on a negative point, so I'll say this: Do what you have do, just don't be stupid about it. Just actually do it. Plan well and be realistic about time lines, potential markets, etc. Get help from others or professionals if you need to. Yes it is difficult, but it can most certainly be done.

 

[cerebus]

But enough said about tax. Tax is step 999 in the process. You have not even started with step 1 and that is to document your idea.

I wonder if Mark Zuckerberg would have started Facebook if tax was his main concern?
Think about it.
Does Facebook give you something to eat?
Does Facebook generate income and give you money every week?
What does Facebook do for you except connect you to other people and allow you to document your life?

Would you have told Mark that he is crazy when he stated that he is going to start a company called Facebook and that is what it's going to do?

Step 999 in the process is retirement. Getting your tax in order should be much higher in the priority list since it directly impacts your profitability. Are you paying tax on that r36k/monthly income and in what form are you declaring it?