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5 Ways SMEs Can Save On Tax

Do you own a small to medium-sized enterprise? Here are five ways to help you save on tax

Ask any up-and-coming small-business owner about what they dread about owning a business and most will tell you that what keeps them up at night is cash flow and accounting-related problems or tax compliance issues.

As an entrepreneur, your job should be running the business aspects of your company and promoting sustainable growth, but small-business owners are often caught in the trap of trying to be a “jack of all trades”. This can not only backfire but can wind up costing you money in the end.

Elize Giese, FNB Business head of investments, suggests these tax-saving tips for small to medium-sized enterprises (SMEs):

  • Constantly track business expenses. Small businesses should keep record of all expenses regardless of their value. Sars provides deductions for a range of business expenses such as entertainment, travelling, gifts for clients and common office expenses, among others.
  • Know which exemptions the business qualifies for. Small businesses qualify for several exemptions from Sars depending on their size and annual turnover bracket. For example, if a small business pays its employees annual salaries of less than R500 000, it’s exempt from paying the Skills Development Levy, which has been set up for the training and development of employees
  • Bring professionals on board. Many business owners try to save costs by trying to handle everything themselves. This often results in costly financial and tax mistakes which could easily have been avoided by using a qualified accountant or tax professional.
  • Use credible online financial tools. Start-ups that can’t yet afford to hire or outsource accountants can take advantage of online solutions offered by their bank or financial institutions.
  • Employee tax. Small businesses that specialise in project work across the country often use temporary workers. Employers need to understand the tax rate for temporary employees on different salary brackets to avoid mistakes and fines from Sars.

Source: Destinyman


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