Tax season is upon us and it is vital for businesses, big and small, to make sure that they are compliant and up to date with their tax submissions to the South African Revenue Service.
Ensuring that your business is fully compliant in terms of SARS’ standards can be a daunting task for any SMME. For any normal business, regardless of whether it is tax season or not, the day-to-day running of the business needs to continue and this means that financial experts such as accountants and auditors cannot always dedicate 100% of their time to ensuring that compliancy is obtained for the business.
South Africa has one of the most advanced tax systems in the world and was ranked 20th out of 189 economies in terms of how easy SARS has made it for a small to medium-sized domestic company to do its taxes. According to the tenth annual Paying Taxes 2016 report by the World Bank and PwC, it takes a typical medium-sized company in South Africa approximately 200 hours to comply with its tax obligations.
Research conducted by the afore mentioned report shows that not only has the tax rate increased for SMME’s in Africa as a whole, but that the number of SMME’s being fully compliant and the time in which it takes to do so has decreased year, after year. For South Africa this means that SMME’s need to be very diligent in ensuring that they are not only fully compliant, but that this happens within the specified time period.
“It is imperative for SMME’s to ensure that they are accurately reporting their financials to SARS. Administration penalities for non-compliance varies across the board and could be anything from having to pay a heavy penalty to company liquidation,” says Grant Robson, Managing Director of the Finance Team.
“In my experience as an SMME and having personally dealt with many finance divisions within these companies, ensuring SARS compliance can be a daunting and a very difficult task. In most cases it is better to call in experts that are not involved in the day-to-day running of the business, because this allows for a deeper sense of interrogation into the financials of the company,” he says.
Robson explains that the use of an experienced yet part time financial executive is often a viable solution for SMME’s as this gives them the expertise they need without the overhead cost of a full time employee.
While many small businesses feel that they can operate below the SARS radar and continue operating without being noticed, it has been proved time and time again that following the law, while it can be a long and tedious task, is better than being caught out and risking losing your entire business.