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So, you’ve read Company Basics and Trust Basics. Now here are some Tax Basics for companies.

1) There are three tax returns each year. The first and second provisional returns which must be submitted in August and February of the company’s tax year if the company year end is February, then the Annual Tax Return which is also submitted in February, but a year later.

2) The first and second provisional returns are based on the last assessed income, so until the company has submitted its first Annual Tax Return, they are usually nils. That means that a new company formed in say, May 2018 will not pay any tax until March 2020, although by then it will have submitted its first and second 2019, its first and second 2020 (all nils) and its annual 2019.

3) The best way to save tax is to be classified as a Small Business Corporation. This sometimes requires a bit of footwork with the shareholding of your companies but, unless yours is a Personal Service Provider Company or a property rental company, it is usually possible and definitely worthwhile.

4) When submitting your company’s annual tax return, you are required to submit a balance sheet and income statement, so the bookkeeping must have been done.

5) If your turnover exceeds R1m a year, the company must register for VAT and submit a VAT return every two months.

6) If anyone (including you) draws income from the company, it must register as an employer at SARS and pay over PAYE each month), Workmens’ Compensation (and submit an annual return) and UIF (and submit a return every time there’s a change of employee or salary).

 

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