Tax Return Tips
Tax season has basically come and gone – How can you do better next year? There are only a few days of the 2021 tax season left, so by now, your businesses tax filling should be all but complete. But the tax, unlike the name, makes it sound, is far from just seasonal. To get the most out of your business, (without giving the most to SARS), planning is key. Get in on a few tax return tips.
Offseason Planning
Strategic tax planning is not just for large companies making millions annually. Being fully aware of your tax strategy and ensuring compliance on a daily basis is the only way to stay on the right side of the law, and breeze through the filing process later.
Take on the Tech
Technology and the sensible and consistent application thereof can play key parts in being a hands- on tax master. Make use of cloud computing to consolidate and compile all your finances in one place, allowing for easy access once tax season opens.
Do you have to file a tax return?
SARS recently released this table on its website, setting out the tax implications and thresholds for Small Business Corporations. (So-called SBC’s)
Once you have taken this into account and have figured out exactly how much of which part of your income you should be paying tax on, just remember about all the allowed deductions!
It’s best to have a checklist on hand, to ensure that you do not miss out on any of them.
Daily Expenses (short-term, often consumable expenses)
- Employee costs. (Including training and education as well as salaries, PPE and uniforms)
- Admin costs. (Storage rental and document management as well as financial services charges like bank costs.)
- Phone and internet setup and office rental. (Include cleaning services and insurance costs here.)
- Office supplies.
- Material and equipment costs.
- All travel and transport costs, including the running and maintenance costs of all business vehicles.
- Marketing, advertising, and promotional expenses.
The next level of expenses are those once-off large expenses you don’t incur daily
Capital Expenses
- Equipment and machinery
- Business vehicles
- Renovation costs
- Office hardware such as furniture and computers. (Include printer rental here)
- Permanent signage for your business.
Finally, also remember that legitimate entrainment costs for clients are allowable deductions. This can include live entertainment and refreshments.
The most important thing to remember about this checklist of deductions is that you will have to be able to prove that every single cent you are claiming as a deduction is directly related to the business and that no one else benefitted from it.
In order to do this, create an easy-to-use filing system for receipts and start filing your tax returns as soon as tax season opens – allowing enough time for any queries about expenses and deductions from SARS. Source South African Revenue Service, https://www.sars.gov.za/tax-rates/income-tax/companies-trusts-and-small-business-corporations-sbc/ (Accessed on 15/11/2-21)
