Starting a small business in South Africa can be exciting—but success depends heavily on getting the foundations right. While our previous article, “From Startup Dream to Sustainable Success”, dives deep into the compliance and administrative essentials for new business owners, this month’s guide is a practical follow-up, focusing on a few critical points that deserve more attention.
Turnover Tax: Is Your Micro Business Eligible?
Turnover Tax is a simplified tax system created for micro businesses in South Africa. It is a tax which is calculated on the turnover of qualifying businesses, as opposed to a percentage of profit.
Please refer to the Turnover Tax rates on the SARS website Turnover Tax | South African Revenue Service.
To qualify, your business must:
- Have a qualifying turnover of R1 million or less during a year of assessment.
- Be a sole proprietor, partner in a partnership, or a Company/Close Corporation owned by natural persons.
- Not render professional services like legal, accounting, or consulting unless a specific exemption applies.
- Not hold shares or interest in other companies (some exceptions exist).
- Not have more than 20% of turnover from “investment income” (e.g. annuities, dividends, interest, rental income) or “professional services”.
Benefits of Turnover Tax include:
- Simplified filing.
- Fewer tax returns.
- Reduced record-keeping.
- Lower effective tax rates.
At Optigrow, we evaluate your business structure to see if you meet the qualifying criteria—and we handle all the SARS paperwork, so you can focus on running your business.
Small Business Corporation (SBC) Tax Relief: What You Need to Know
Many small companies miss out on this valuable tax benefit simply because they don’t understand the criteria.
To qualify as a Small Business Corporation (SBC), your business must:
- Be a private company or close corporation.
- Have a gross income not exceeding R20 million.
- Be 100% owned by natural persons.
- Derive less than 20% of income from investment (e.g. annuities, dividends, interest, rental income) or personal service income.
- Not earn most of its income from rendering a “personal service” unless you employ more than three full-time, unconnected employees.
What are the tax benefits?
- SBCs pay tax on a sliding scale rather than the standard 27% corporate tax rate. Please refer to the SBC Tax rates on SARS website Companies, Trusts and Small Business Corporations (SBC) | South African Revenue Service.
- Substantial savings, especially in the early years of growth.
If you’re not sure if your company qualifies, Optigrow will perform a full assessment and if your Company qualifies, you will derive the tax benefits available to SBC’s.
The Power of Using Xero for Small Business Accounting
Manual bookkeeping and Excel spreadsheets are quickly becoming outdated. Today’s businesses need smarter, faster tools.
We’ve mentioned the benefits of Xero in previous articles, but it’s worth highlighting why it’s our top recommendation for accounting software:
- Real-Time Dashboard: Track sales, expenses, cash flow and more at a glance.
- Recurring Invoices & Auto Reminders: Great for monthly clients or subscriptions. Xero keeps the cash coming in—automatically.
- Accounts Payable Automation: Upload bills and Xero reads the data, populating the invoice and saving hours of admin.
- Bank Feed Integration: Your transactions are pulled directly into Xero via secure bank feeds.
- Document Capture with Hubdoc: Scan or snap receipts, and Hubdoc stores and integrates them into your records.
- Payroll & Compliance Sync: Through SimplePay, payroll syncs directly with your general ledger.
- Annual Financial Statement Support: Integration with Draftworx ensures compliance with accounting standards.
At Optigrow, we set up and manage your entire accounting system on Xero, giving you financial clarity and peace of mind, all while staying SARS-compliant.
Important SARS Submission Deadlines: Your Quick Checklist
Staying compliant means staying informed. Here’s a quick reference guide to some of the most important SARS deadlines for South African businesses:
Return Type | Due Date(s) |
Provisional Tax: |
|
1st Provisional tax: | 31 August (6 months into the tax year) |
2nd Provisional tax: | 28/29 February (year-end) |
3rd optional: | top-up payment can be made 6 months later |
Annual Income Tax Return | Within 12 months of the company’s financial year-end |
VAT201 | 25th of the relevant tax period (manual submission) or last day of the month (eFiling) |
EMP201 | 7th of the following month, or last business day before if the 7th is a weekend/public holiday |
EMP501 Reconciliation | Interim: 31 October, |
Use this checklist as a reference to avoid penalties and missed deadlines. Or better yet—let Optigrow manage your tax calendar for you.
Stay on track and avoid costly penalties.
Contact Optigrow today for expert guidance and hassle-free SARS compliance support tailored to your business!
