Common Tax Mistakes Business Owners Make

Everyone makes mistakes; it's all part of the entrepreneurial process, but we’re here to ensure you don't make the same mistakes in the next tax season...

Here are the most common mistakes we see business owners make regarding tax and how to avoid them.

1. MIXING BUSINESS AND PERSONAL FINANCES

Keep your business and personal finances separate to avoid the frustration of reconciling bank statements come tax time. It will be less of a headache and save you so much time when you need to know your business's profit/taxable income. Registered companies open themselves up to legal problems when their finances aren't separate from personal transactions and can become personally liable.

2. NOT SUBMITTING AND PAYING PROVISIONAL TAX

This results in huge underestimation penalties. Make sure that you are registered as a provisional taxpayer if you are running a business.

3. CLAIMING TOO MANY EXPENSES

When claiming an expense, it must be in the production of income with supporting documentation as proof.

4. MISSING OUT ON VALID TAX DEDUCTIONS

While too many expenses can raise a red flag with SARS, missing out on tax deductions you are entitled to only punishes you and your business.

5. POOR RECORD KEEPING

Store documents on secure cloud platforms like Google Drive or Dropbox. This not only saves space but also allows you to access files from anywhere. Use mobile apps to capture and categorise receipts on the go. This makes things much easier if your tax return is selected for an Audit.

6. WORKING WITH THE WRONG EXPERT

Don't use anyone who suggests that you hide income or deduct expenses that you know you are not allowed to; this is a huge red flag.

7. NOT USING THE RIGHT TOOLS FOR YOUR PROCESSES

Invest in cloud-based tools and accounting software that make collaboration easy and effective. This will also help you to know in real time how much tax you should be putting aside.

 If tax is getting you down, then let's chat about how we take the hassle out of tax season for South African business owners!