Tax types applicable to Small, Medium Business Enterprises

The commencement of business in South Africa as an entrepreneur may be a daunting task more especially navigating through the various tax obligations flowing through the ownership of a business. In certain circumstances, there may be tax relief measures and incentives that aid in the easing of complexities of managing your tax affairs as a business owner/entrepreneur.

It is important to note that small-medium micro enterprises (“SMME”) are not excluded from the SA tax cycle, therefore in certain instances, the same process applies to large businesses shall be applicable to an SMME. The tax cycle proves to be cumbersome for small entities as a result of not being as formalised as the larger businesses.

Type of Organisation

Taxes Applicable

Details

Sole Proprietor

Income Tax

Every person who at any time becomes liable for tax or who becomes liable to submit a tax return must apply to SARS to register as a taxpayer. Should you be registered with SARS in your personal capacity then your business as a sole proprietor shall also be registered.

Provisional Tax will be applicable where a person earns in excess of R83 100 and has business operations apart from his/her normal employment.

 

Value Added Tax

A person becomes liable to register for VAT purposes in SA if they carry on an enterprise and make taxable supplies of goods or services in excess of the VAT registration threshold, i.e. when it currently makes supplies in excess of R1 million during a 12-month period.

 

Employees Tax

Employees Tax

Every employer is required by SARS to register for Employee tax, this shall entail the declaration of PAYE, UIF, and SDL. The related registration may be performed on e-filing.

PAYE
PAYE is payable if your employee/s earns more than R83 100 for the 2021 tax year. Where employees earn more than 83 100 in a year, PAYE shall be applicable. The latter should be withheld and declared to SARS monthly.

Partnership

 

Taxes applicable under a sole proprietorship will be applicable to a partnership, bearing in mind the income and expenses related to the business must be taken into account on each partner's individual basis.

Independent contractor

 

PAYE shall not be applicable should you be an Independent contractor. Furthermore, similar to a sole proprietor it is a requirement by law to register for provisional tax. The completion and submission of tax returns as an Independent contract may be cumbersome, therefore it is recommended that you partner with Tax Professional. 

For more information please visit:  https://www.sars.gov.za/Pages/Forms.aspx?pageid=H2