Your business is finally starting to get off the ground. You’re making some great strides in the right direction. You’ve met your 6-month objectives and the sky’s the limit. You’re looking at finding bigger premises for your business. Then you check your calendar. It’s time to put your big office dreams on the backburner – tax season is here.
While many of us are not thrilled by its arrival, small businesses, in particular, are feeling the pinch the worst. With the VAT increase announced at this year’s Budget Speech and climbing petrol prices, small businesses need to reassess how they are handling their cash flow.
However, there are still many ways small businesses can save and manage cost by improving their efficiencies. One of those ways is through tax competence. From tax exemptions to tracking your expenses, here are 5 smart ways your business can pay less this tax season.
1 Track your expenses
Do you remember that coffee meeting you had last week? How about the time you drove an hour or two to see a client? Make sure your business is keeping a record of all the expenses.
Sometimes we think some of these minor expenses are dismissible. Big mistake. SARS provides deductions for a range of business expenses, such as entertainment, traveling, client gifts, common office expenses and more. Keep those small slips, you’ll thank us later.
2 Use Your Home As An Office
Is your business small enough to be run from home? Use it! Using your home as business premises can benefit you at tax season. This includes interest payments on the bond and daily expenses incurred from running the business.
There are a number of requirements you need to meet in order to capitalise on this tax benefit. TaxTim does an excellent job at explaining what’s required in order to deduct home office expenditure.
3 File Your Returns on Time
The reason for this is twofold. By making sure you have met your tax obligations on time helps you keep track of your finances i.e. not holding onto money that isn’t yours. Secondly, SARS is not afraid to hit your business with a penalty. That penalty fee ranges from R250 – R16 000 per month!
4 Stay Clued Up On Employee Tax
This is especially the case for small businesses. When your business is growing, you are more likely to be hiring the services of a lot of temporary workers and freelancers. Make sure you understand the tax rate for temporary employees in different salary brackets to avoid mistakes and fines from SARS.
5 Use a Tax Professional
Small business owners are entrepreneurs. We get it. It is in your nature to want to handle every aspect of your business on your own. However, this can result in costly financial and tax mistakes. Luckily, there are tax professionals out there who specialise in helping small businesses with their tax returns. If you are short on time, contact a tax professional to assist with your returns.