Need advice on tax for new business

[newguy]

Hi

I'd like to start a consulting business, providing services to businesses. I've looked about on Sars's site for what I'd need regarding VAT and all, but I can't find anything useful. Would I have to register for VAT? What if I start off simply not charging VAT? Are there any good web resources covering this kind of info?

[Blurock]

You only need to register for VAT if your taxable earnings exceed R1mil. You still have to register your business for tax. Complete form IT/IB 77C and hand in to your SARS office for tax registration and a tax number.

[Mark Atkinson]

You only need to register for VAT if your taxable earnings exceed R1mil. You still have to register your business for tax. Complete form IT/IB 77C and hand in to your SARS office for tax registration and a tax number.

I actually believe that it's taxable turnover, so be sure not to get it confused with profit.

Also, registration for tax depends on what type of business structure you are looking at.

Sole proprietor, Partnership or Private company?

If you're not registering a company, you don't actually register for income tax (unless you're registering for VAT). You pay tax for earnings of the business in your personal capacity. That means as long as you're registered for income tax, you can add your earnings from the business to your taxable income every year.

We're busy working on a new web resource for small business owners actually, that will cover all of your questions, but it's still a long time coming.

[newguy]

I actually believe that it's taxable turnover, so be sure not to get it confused with profit.

Also, registration for tax depends on what type of business structure you are looking at.

Sole proprietor, Partnership or Private company?

If you're not registering a company, you don't actually register for income tax (unless you're registering for VAT). You pay tax for earnings of the business in your personal capacity. That means as long as you're registered for income tax, you can add your earnings from the business to your taxable income every year.

We're busy working on a new web resource for small business owners actually, that will cover all of your questions, but it's still a long time coming.

Thanks. Finding this all a bit confusing, like where you say "you don't actually register for income tax (unless you're registering for VAT)" - under what circumstances should I register for VAT? is that the >1mil turnover condition?

[Dave A]

First question - will your turnover for your business exceed R1 million per annum?
If yes - you must register for VAT. (This is not a decision, it's what is required).
If no - we get to the next question -

Will the bulk of your clients be VAT registered vendors?
Will your clients be able to claim input VAT from your billings?
Will your clients want to be able to claim input VAT from your billings (ie. this might affect their purchasing decision)?
If yes, you might want to consider a voluntary VAT registration.

There are lost of discussions around tax on TFSA - here's a recent one on the need to knows about tax that might be worth reading.

[dellatjie]

Newguy,

When Mark Atkinson said "you don't actually register for income tax (unless you're registering for VAT)", he meant that should you be trading in your personal name ie. Mr. A. Smith t/a ABC Enterprises, you will declare that income in your personal name (assuming of course that you have a personal income tax refence number). Alternatively, should the business be trading in a CC / Pty / Business Trust etc, that entity will have to be registered seperately for income tax.