See opportunities to minimise your tax burden or take advantage of tax incentives for companiesĬreate a business that can becomes sellable Reduce personal exposure to the business’s risksįormalise your business before seeking investment or a loan Limit your personal liability for company debts So, it may make sense to register a business when you want to: Keeping that all in mind, you might need a more formal business structure if you’ll need to take on debt to grow your business or if you want to pitch for business from government and large companies. The reporting and legal requirements are far less demanding than they are for a registered company, and the administrative costs are minimal. In spite of the above, for many entrepreneurs with small businesses, it makes sense to run a partnership or sole proprietorship, which are the simplest businesses to maintain. This form of business where one person owns all the assets of the business means that if the business fails, any of your assets, including your personal assets, can be seized to pay for all the liabilities owing. The individual may also call themselves an “independent contractor” or “freelancer”. The information in this guide is aimed at alleviating tax-related stress for you and your small business whether it is a registered company or your trade in your own name.Ī sole proprietorship is a business in the name of and operated by one individual. The complex and strict nature of tax returns is often intimidating and can be quite a burden to small businesses. Small Businesses are required to follow the same tax processes as medium or large businesses, but small businesses often experience the tax process as stressful due to not being as formalised as these larger entities. It is also important to note the various options with regard to reducing some of the administrative requirements to make tax compliance easier as well as the different tax incentives and rates that may apply in certain instances.īusiness Tax refers to a tax levied by the South African Revenue Services (SARS) on the profits made by businesses. a registered company) or in their personal capacity. Entrepreneurs who want to start a business need to be aware of the tax obligations of running a business whether it is in the form of a legal entity (i.e.
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