Did you know that Sole Proprietors and Partnerships are among the oldest forms of business on earth? The draw of this form has attracted people since the first smith hung his sign outside his shop in medieval England or the first African started breeding cattle on the savanna. The reason for this is its simplicity to set up and run. In short, the Sole Proprietor or Sole Trader or Partner IS the business and the business IS them. You cannot separate the two. They are the multiple personalities of the business world. This form of business has various pros and cons, which a short Google search would unearth for you, so we won’t rehash these. We will focus solely on the tax implications and how we can help you navigate these pitfalls.
Some people qualify as provisional taxpayers, but a lot don’t know what that means or what provisional tax is. So, in this article I will try to clear up some of the smoke surrounding this often-misunderstood and feared tax.
Firstly, provisional tax is not a separate type of tax, such as VAT or the road tax you pay through your very expensive fuel bill. Provisional tax is merely a method that SARS uses to collect income tax, whether it be company tax or personal income tax. For individuals it uses the same tables and rates as you would be taxed on if you were a straight forward employee and counts towards the same tax bill as an employee pays through the PAYE that is shown on their payslip. The big difference is when and how this tax is calculated and paid to SARS. Employees pay their tax every month, provisional payers pay it twice a year before the 31st August and 28th February. For companies it uses the straight forward 28% tax rate or the small business tax tables.
I do a lot of tax returns every year and this has to be one of the most common complaints I receive. Every year without fail I get clients who compare this year with last and then go to SARS only to be told the exact same result as I told them. So, I thought it would be a good idea to examine why this phenomenon occurs.
Hello everybody, since this is my first post on this brand new blog I thought I would kick off with a topic that I get asked about on quite a regular basis: what do I need to know when I start a new business?
So you've had your brilliant idea and now you want to put it into practice. You start working at it and the idea takes off, orders start coming in, You're so busy you wish you had 30 hour days to get everything done. Is this success? Well, not really. Suddenly you realise your business is rolling along but cash flow is now becoming difficult, SARS is knocking at the door and your excel spreadsheets are growing out of hand.
Author: Brandon Allen
I'm a business Accountant in practice. Nothing fancy about my education but occasionally I have a flash of inspiration you might find useful. I also have coffee running through my veins
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