Funding company with my own capital

**Mike C** · 12-Oct-18, 01:18 PM

You need to see yourself and your company as separate entities each with their own obligation to submit tax returns and pay the necessary tax.

You have presumably already paid tax on the money that you are going to put into the company. So, in effect, you will be making a loan to the company.

The company then is in debt to you for that amount. When the company starts making a profit it can then pay you back your loan.

Because you say that you have no accounting skills I would suggest that you get someone to help you to keep a strict account of your business transactions right from the start as it can get out of hand very quickly.

As an aside ... just because your company is registered for tax does not mean that it has been registered as a VAT vendor.

Who should register for VAT?

Any person that carries on a business may register for VAT. You can register once for all different tax types using the client information system. The term person is not only limited to companies but also includes, amongst others, individuals, partnerships, trust funds, foreign donor funded projects and municipalities. In order to register, an application form must be completed and a specific process must be followed.

It is mandatory for a person to register for VAT if the taxable supplies made or to be made is, in excess of R1 million in any consecutive twelve month period.

A person may also choose to register voluntarily if the taxable supplies made, in the past period of twelve months, exceeded R50 000. As from the 1st of March 2012, qualifying micro businesses that are registered for Turnover Tax may also choose to register for VAT provided that all the conditions for voluntarily registration for VAT are met.

A person who is obliged to register for VAT is referred to as a vendor.