Tax experts offer their top tips for small businesses this tax season
We’re approaching tax filing season here in South Africa, so it’s time for small business owners to get their information in order and ready to file. Everybody knows that filing taxes can be extremely time consuming.
We know many small businesses are already struggling following the challenges of last year, so it’s vital that you get tax filing right to avoid any penalties or nasty surprises. This means understanding how to stay compliant and also what special taxes may apply to you.
Over the past few years SARS has worked hard to provide digital alternatives to filing in-branch, including eFiling and internet bank transfers. The changes are helping to improve the process – SARS reported that the majority of payments (81.2%) received in 2019/20 were via eFiling. eFiling means you can send in your returns, review your tax status and pay SARS online, for free at any time.
It’s also crucial that you are aware of the tools and support available. At Xero, we’ve developed a new suite of cloud tools to enable you to prepare, store and eFiling VAT returns to SARS all in just a few clicks. These tools increase efficiency, reduce errors and admin – it’s never been easier or faster to eFile.
We know that there’s nothing more reassuring than advice from an expert, and that’s why we’ve built the Tax Task Force, including Candice Mullins, Managing Director of The Tax House; Louis Fourie, CA(SA) and Managing Director of BVSA; and Nicole Rousseau, Head of PKF Ignite. They will help simplify tax compliance for SMEs here in South Africa with ‘Tax Simplified’ tips over the coming weeks.
Here are their top tax tips to set you off to a strong start this tax season.
Avoid nasty surprises
Candice Mullins says, “There is no better sight than hindsight. Many businesses think that tax planning is only applicable to large corporates but they are wrong. Tax planning is just as critical in any small business, and it should be done with a reputable and experienced tax professional.”
Candice adds that “Having a 360° understanding of one’s tax risks enables small businesses the opportunity to understand the tax implications of day-to-day transactions. Be as tax efficient as possible to avoid any nasty surprises. Manage cash flow to cater for the taxes payable thereby avoiding penalties, interest and other negative consequences. Also, be sure to maintain a healthy relationship with our Revenue Services.”
Get your tax-house in order – there’s nowhere to hide this year
Louis Fourie, warns “The days of taxpayers’ compliance status not-being fully tested by SARS are well and truly over. SARS’ Strategic Plan for 2020/21 to 2024/25 also spells it out clearly – there will be increased levels of compliance, higher detection of those who don’t pay, and fines or penalties for those that don’t comply.”
Louis says that small businesses should work with their accountant now to ensure a timely submission and to understand exactly what they need to be compliant this year. “SARS is raising auto assessments for certain individual taxpayers, and you should speak with a registered tax practitioner about these to ensure that you’re being assessed correctly – otherwise you may lose out on valuable refunds.”
Louis also emphasises the need for a close eye on all your details and documents. “Make sure that your registered details are 100 percent correct with SARS because incorrect details may lead to unnecessary penalties. Always promptly address any questions from SARS and use Xero to keep a record of all your accounting transactions and supporting documents that they may request.”
Automate processes and use the right technology
Nicole Rousseau says, “Technology is key to taking the pain away from tax filing for small businesses and accountants. We’ve seen digital developments in recent months that are changing the game. From bank feeds that allow the automated flow of business transactions into accounting software, to being able to snap receipts and upload the information from anywhere.”
She adds, “Using a cloud accounting platform to manage your finances makes it easy to see your finances in real-time and collaborate with your accountant seamlessly throughout the year. This means that when you come to file, everything is ready and easy to view.
We’ve been trailing Xero’s direct eFiling to SARs feature. New technology like this means a manual process, which used to have multiple steps, are now quick and simple for small firms. I’d recommend that all business owners look at how tech tools can automate a lot of the heavy lifting for them.”
Stay up to date on the latest tax information
We know that this year has been tough for small businesses, that’s why we’re working with our partners and experts in the field to make the tax season as painless as possible. You’ll find advice, such as the upcoming content from our Tax Task Force, as well as tips, ideas and resources that will ensure a smooth-sailing tax filing season on the Xero Blog.
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Source: Xero Blog
