In the midst of trying to keep a business afloat, pay employees, suppliers and office rent on time, Sars still want their money. I say “their money” because Sars considers it to be its money and this begs the question: why?
Within our social system, we elect a government which is given duties which you and I wouldn’t want to be responsible for. For example, imagine if there was no government to build roads and each individual had to build her own road. Government, on behalf of all citizens builds roads; but as all business owners know, building roads and the like costs money.
A small business must consider paying tax as a cost of doing business. The infrastructure that is necessary to conduct business costs money and businesses pay for this infrastructure indirectly through taxes.
That infrastructure is diverse as business legislation, building roads, electricity generation, efficient banking and telecommunication systems through regulation from the reserve bank and Icasa respectively. Businesses should not complain about a country’s lack of infrastructure if they are not contributing to the improvement of it by not paying their taxes.
Evading tax always seems like a clever thing to do at the time, especially when Sars relies mostly on your integrity. But it has become increasingly difficult to evade tax. Almost all businesses communicate and transact using IT systems that store all information. This information can be retrieved to show all the invoices sent by e-mail, every payment made into the business account and, especially, every rand that was not declared to Sars.
As difficult and painful as it may be, it is far less painful than the legal action Sars will take after they discover your misdemeanours. Many small business owners have lost all they had worked for because they thought they could cheat the system. As long as Sars records show some discrepancy on your account, you will end up paying much more than you would have paid.
Light in the gloom
Taxes are essential as they are the main source the government uses to raise money and small businesses contribute immensely to the overall tax revenue. But it gets a bit confusing at times for a small business because of the different types of taxes, when they should be paid and even how to calculate how much should be paid. In the coming weeks we will look at VAT, Income and Provisional Tax, UIF, PAYE, SDL and other forms of taxes which concern a small business and try to bring some clarity to the perceived mess.
unya Duvera (email@example.com) is CEO of Duvera Analytics.