In a survey conducted by international finance expert Garrett Gunderson 93% of small businesses were found to be overpaying on tax. Research shows this is because many SMEs do not fully understand the tax write-offs available to them. While compiling your annual return may feel like admin, ensuring you submit it correctly can save your business thousands.
We’ve compiled our top tax tips for small businesses.
Know what you can deduct. There are a number of deductions and allowances that SMEs qualify for. These include items such as the cost of office space, vehicles and business supplies. Make sure you are aware of the full list of deductibles to ensure you never pay more tax than you have to.
Check depreciation rates. Depreciating your business assets that lose value over time is another way to ensure you are not paying more tax than you have to. Use the correct wear and tear rate SARS prescribes to different asset types. For example a vehicle depreciates at a different rate to that of a printer.
File and index every single slip. If your business is audited there is nothing worse than having to search for old slips. Saving digital copies is a simple way to ensure they are easy to find. Legislation requires that SMEs keep all slips and documents for at least 5 years.
Use a qualified accountant and tax practitioner. Enjoy peace of mind knowing that your tax return is correct. A tax practitioner not only helps you ensure you are paying as little in tax as possible but can also help avoid unpleasant surprises resulting from miscalculations.
Tip: Almira has experience helping over 200 businesses with their tax returns. Request a personalised quote for your business.
Know the type of tax your SME is liable for. The size of your business and its annual turnover will determine whether you are liable for value-added tax (VAT), income tax or pay as you earn (PAYE) tax.
Tip: View the SARS website for a comprehensive breakdown of what types of TAX SMEs are liable for.