[Question] Sole prop tax issues

[Kris]

I have started a cake business , my annual income for the past year was 130K, how do I go about preparing an Inc statement? Do I take all the Sales less all the related exp to calc the Profit, or do I have to do a cash book & bank recon & then calculate the business profit.
I assume I will pay tax on the profits only , what about my drawings each month?
How do I register the uif & paye of my business on efiling?
thanx

[clearence]

Hi kris. Your drawings are taken from net profit- it is the net profit figure which is taxed. If you were an ltd company your drawings would be taxed at personal rates of taxation.

Example
If your net profit is 100k, and you have taken 30k in drawings. You are taxed on the 100k in the normal way; you are not taxed again on the drawings figure.

Yours accounts should look something like the following:

Sales/Income

less Cost of Sales i.e. Purchases/Stocks etc

= Gross Profit

less Expenses i.e Wages to employees, light, heat, telephone etc

= Net Profit

This net profit figure is then taxed. Your drawings figure will be a portion of this net profit otherwise you will have a negative capital account for the year.
Cashbooks can help you capturing all the payment and receipt for a particular month or duration and If you have employees, you are required to make UIF contributions on their behalf. These contributions are partly deducted from the employees' salaries and are partly paid by the employer
I can also help you with bookkeeping services and registration of UIF.

Best of luck with it.

[Kris]

That makes alot of sense, thank you.
With regards to the staff tax, can i log onto my sars personal efiling profile & add the uif & paye or is it a separate profile for companys.

Hi kris. Your drawings are taken from net profit- it is the net profit figure which is taxed. If you were an ltd company your drawings would be taxed at personal rates of taxation.

Example
If your net profit is 100k, and you have taken 30k in drawings. You are taxed on the 100k in the normal way; you are not taxed again on the drawings figure.

Yours accounts should look something like the following:

Sales/Income

less Cost of Sales i.e. Purchases/Stocks etc

= Gross Profit

less Expenses i.e Wages to employees, light, heat, telephone etc

= Net Profit

This net profit figure is then taxed. Your drawings figure will be a portion of this net profit otherwise you will have a negative capital account for the year.
Cashbooks can help you capturing all the payment and receipt for a particular month or duration and If you have employees, you are required to make UIF contributions on their behalf. These contributions are partly deducted from the employees' salaries and are partly paid by the employer
I can also help you with bookkeeping services and registration of UIF.

Best of luck with it.