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Article by listed accountant TYRONNE NEL

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Ok inspired entrepreneurs, so you’ve registered your business entity and opened your bank account and now you’re probably thinking “I don’t want to get in to trouble with SARS, so what do I do now?”

Well that’s exactly what we will be covering with today’s article. Statutory Registrations are a very important part of running your business legally, below is a list of registrations that need to be completed at each stage of your business cycle.  

Income Tax

All businesses need to register with the SARS for Income Tax. In the past this registration was done automatically when you registered your business with CIPC, however Government in their wisdom decided this made life too easy for SMME’s, therefore you now have to visit your nearest Revenue office and complete an IT77C whereupon they will register your business for income tax. Now it’s important to note that it’s not just your business entity that needs to be registered for income tax, ALL entrepreneurs also need to register for Income Tax as a provisional Tax Payer. So while you’re at the Revenue office, grab an IT77 form and register yourself as well J.

The moment you decide to employ staff, besides the headaches of the Basic Conditions of Employment Act, you will need to complete the following registrations:

UIF (Unemployment Insurance Fund)

All business entities (this includes Sole Proprietors) who employ staff that work more than 21 hours per month are required to register with the Department of Labour as an Employer. Once you are registered you will need to submit a UI-19 form to the Department of Labour whereupon you will list your employees and what they earn.

Compensation Commissioner (Workman’s Compensation)

All business entities (this includes Sole Proprietors) who employ staff, as above, need to register with the Compensation Commissioner. Workman’s Compensation is essentially a form of insurance that covers you and your employees from any workplace accident. There was a mistaken belief that only construction or “trade” related businesses were required to register with the Compensation Commissioner, unfortunately, this is not the case!

PAYE (Pay as you Earn)

All business entities (this includes Sole Proprietors) who employ staff that earn more than R67 111 per year are required to register for PAYE with the Receiver of Revenue.  

SDL (Skills Development Levy)

All business entities (this includes Sole Proprietors) with a payroll that exceeds R500 000 per annum are required to register for SDL. There is no separate form for this registration and if it is not done when you register for PAYE, you can ask SARS to activate it when you see that you will exceed the R500 000 per annum payroll threshold.

 

The monthly income from your business is now growing, but instead of making you happy, it’s making you worry. The thing it’s making you worry about is……. VAT!

VAT (Value Added Tax)

Well no need to worry, unless your business is turning over more than R1 million per annum (R83 333.34 per month) there is no need to register. Business entities (this includes Sole Proprietors) can voluntarily register for VAT if their Turnover is below R1 million. I know, I hear you saying “Why!!”, but in some cases it is beneficial to do so.    

There you have it, besides industry specific registrations, Liquor Board, Health Department, etc., the above registrations are what the majority of small businesses will minimally require to begin operating legally. Unfortunately as your business grows, there are still more Statutory Requirements that you will need to comply with, which we will cover later.

Now I suppose you’re looking at the above registrations and are probably thinking, 6 registrations, 6 forms to complete! Well we wish it was that simple, unfortunately the above registrations require the following forms to be submitted annually:

  • Income Tax:      3 forms (IRP6/1, IRP6/2 and IT14) – same for you as a Sole Proprietor.
  • UIF:                  12 forms (1 x UI-19 form for each month).
  • Comp Com:       1 form submitted annually.
  • PAYE:               14 forms (1 x EMP201 form per month & then 2 x EMP501 recon forms).
  • SDL:                 covered by PAYE form.
  • VAT:                 6 forms (1 x VAT201 for each VAT cycle)

Clearly there is a big admin burden with being VAT registered.

WOW, minimally 36 forms to submit annually and that’s just to cover the basics. Next time, we’ll look at the voluntary registrations for businesses in South Africa, good luck…