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A Fin24 user seeks tax help for his small business. He writes:
What is the procedure required to register a small business as a "Small Business Corporation" with the South African Revenue Service (Sars)?
Business consultant Tienie le Roux responds:
All businesses must be registered with the taxman and should your business meet the requirements of Sars and of the Income Tax Act, Sars will calculate its tax in terms of Section 12 E as a small business corporation (SBC).
However, these concessions are only for close corporations and private companies.
Take note that SBCs are not the same as small, medium and micro enterprises (SMMEs). SBCs are defined in the Income Tax Act which also governs this type of business, while the National Small Enterprises Act governs SMMEs.
We suggest that you as the business owner write a letter to Sars stating that you qualify due to the following criteria being met, and that the business is either a closed corporation or a private company:
• All shareholders and/or members during the financial year are natural people who hold no shares in any other private companies or closed corporations;
• Gross income of the business does not exceed R14m;
• Not more than 20% of the gross income is from investment income or from rendering a personal service, like accountancy, legal advice, architectural services, and so on.
Or you could also, when capturing the information on the income tax return on the second page, tick the block that asks if the entity is a small business corporation. Then fill in the turnover.
Sars may request additional information if necessary; it should then assess you on the SBCs tax tables.
- Fin24
*Share your experience of setting up your own business, or simply ask a question. Our business panel can put you on the right path.
What is the procedure required to register a small business as a "Small Business Corporation" with the South African Revenue Service (Sars)?
Business consultant Tienie le Roux responds:
All businesses must be registered with the taxman and should your business meet the requirements of Sars and of the Income Tax Act, Sars will calculate its tax in terms of Section 12 E as a small business corporation (SBC).
However, these concessions are only for close corporations and private companies.
Take note that SBCs are not the same as small, medium and micro enterprises (SMMEs). SBCs are defined in the Income Tax Act which also governs this type of business, while the National Small Enterprises Act governs SMMEs.
We suggest that you as the business owner write a letter to Sars stating that you qualify due to the following criteria being met, and that the business is either a closed corporation or a private company:
• All shareholders and/or members during the financial year are natural people who hold no shares in any other private companies or closed corporations;
• Gross income of the business does not exceed R14m;
• Not more than 20% of the gross income is from investment income or from rendering a personal service, like accountancy, legal advice, architectural services, and so on.
Or you could also, when capturing the information on the income tax return on the second page, tick the block that asks if the entity is a small business corporation. Then fill in the turnover.
Sars may request additional information if necessary; it should then assess you on the SBCs tax tables.
- Fin24
*Share your experience of setting up your own business, or simply ask a question. Our business panel can put you on the right path.
