I'm starting a home and small business IT support company from home (I live with my parents). I've handed in the forms to register it as a Private company, waiting to get confirmation in who-knows-how-long from now, and want to dust any and all legislative issues I'm going to have before I get started. So!
First things first, do I qualify for turnover tax? I'm assuming not, since more than 20% of my total income will come from "professional services" in the field of IT, which SARS have marked down:
That being the case, do I now fall under the small business category, for regular income tax? Do I maybe qualify for another, less burdensome tax bracket?Professional service
A service in the field of accounting, actuarial science, architecture, auctioneering, auditing, broadcasting, consulting, draftsmanship, education, engineering, financial service broking, health, information technology, journalism, law, management, real estate broking, research, sport, surveying, translation, valuation or veterinary science
I live at home with my parents, and they want me to pay a monthly 'rent' for internet access, utilities, food, cleaning services, etc etc. Is it better for me to pay myself a salary that covers this rent, or to mark it down as a business expense? Keep in mind that my parents run their own business from home.
The car that I currently use personally is under my father's name. Can I mark down all car-related expenses (petrol, parking, maintenance, cleaning, etc) as business expenses, since I'll be using it as my form of transport? Should I?
I first took some tax advice from my parents, since they operate their own company. Their advice to me is to operate at a loss forever, so I don't owe any tax. Credit myself or them and find any and all expenses that can be paid by the company so it operates at a paper loss, not necessarily a realised loss. Now, I want your opinion on this, as I don't personally feel comfortable adjusting my 'apparent' income and expenses so as to avoid tax. I'd rather operate with a clean slate. Is this how businesses are carrying out their work in this country? Is this not legal fraud? They convinced me that it's pretty much the job of accountants to minimize your tax payment.
That's all that's bugging me for now, I might come back with more. But until then I'd really appreciate your help in this regard!