It is very easy to register a private company and to start trading. But there are a lot of administrative tasks that needs to be done. And these tasks are usually overlooked by new business owners. This article will give you an overview of what needs to be considered to avoid future surprises and to ensure your business is a success.
All private companies have to register for VAT at SARS when the turnover exceeds R1m for a consecutive 12 months. This is usually when companies start to struggle with their cash flows, because they then have to deduct 15% from all goods sold or services delivered. And unfortunately, not all expenses are not VAT deductable. Some of these expenses include fuel, salaries and wages and goods bought at suppliers who are not VAT registered.
When the company is is registered for VAT, the monthly income of the company will drop by an estimated 7.5%, depending on the business activity. Companies that are labour intensive, will have a bigger drop in monthly income. This is why it is important to run your company from day one with VAT in mind, this will ensure that you are ready when it becomes time to register for VAT.
All companies have to submit provisional tax returns twice a year. One 6 months before the end of the financial year. And the second on the last day of the financial year. The purpose of these forms are to pay tax on the estimated profit of the company for the current tax year.
After the financial year end, a private company has to compile financial statements. These financial statements are used to submit the tax return at SARS.
The company has to appoint a public officer at SARS. This is to ensure that the company an gain access to their eFiling profile in order to submit tax returns.
When the first employee is employed, the following needs to be taken into consideration:
Any employee who works more than 24 hours a month has to be registered for UIF. UIF also has to be deducted from his salary.
If any employee earns more than the tax threshold, the company needs to register for PAYE. Contact us if you are not sure of when to register.
As soon as the first employ is appointed, the company has to be registered for COIDA. This is to ensure that the employees are covered should they get injured on duty. There is an annual premium payable to the department of labour.
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I have over 10 years experience in dealing with CIPC, tax and accounting matters. I have been self employed for the last 5 years. We always strive to give customers the best advise and service possible.