A Business Tax Calculator in South Africa for 2023

Business Tax Calculator

Why would you need a business tax calculator? Owning a business is one of the most rewarding and challenging prospects in life. While you reap the benefits, there are drawbacks such as complicated tax payments. Tax is however unavoidable and should be adhered to and complied with accurately to avoid penalties in the future

In this article we will discuss small business tax and whether or not a business tax calculator is worth using when calculating your tax returns. 

How Much Must a Business Make to Pay Tax in South Africa?

All businesses big or small must register for corporate income tax. Whether you’re actually liable to pay tax or not is another matter. Depending on how much annual income your business generates, you will determine whether or not you have to pay tax. Other factors such as whether your business is based in South Africa and the number of employees will also play into your calculations. Typically a small business would comply with and pay tax according to the provisional tax method. However, SARS launched an alternative tax for small businesses known as turnover tax. This was introduced to simplify tax for small businesses and make it easier for these business owners to comply with their tax requirements. 

According to turnover tax, a business will have to start paying tax once its annual income exceeds R335,000. 

Small Business Tax in South Africa for 2023  

There are multiple taxes that a small business may be liable for. It is important for a small business to keep track of these taxes and pay them on time, as late payment will result in a fine, which will cost you more in the long run. Therefore, never attempt to avoid paying your taxes. 

  • Provisional Tax: Payable two to three times a year, provision tax is a method of paying income tax. Typically, income tax is payable annually whereas the provisional tax payment method breaks this payment up into smaller, consecutive amounts. 
  • Capital Gains Tax: This tax is only payable if you have sold any business assets. This could include shares, property, furniture, or even your entire business. Therefore it is a once-off payment calculated on the profit you made from the sale. 
  • Dividends Tax: This tax is payable if the business pays dividends to shareholders. The dividends itself is taxed in such a case. 
  • VAT: Also referred to as Value-Added Tax , VAT is a tax that is placed on the consumption of goods and/or services. If a business has an annual income that exceeds R1 million, they are liable to pay and must register for VAT. 

As keeping track of and completing all of these payments can be time-consuming, turnover tax offers a simple solution. It requires all of these taxes to be paid in one lump sum annually. While this might be a simpler solution, it is important to ensure that you save this money throughout the year to ensure you have the money required available when the time comes to pay your taxes. 

Making Use of a Business Tax Calculator

Though there are business tax calculators available, it is best to perform these calculations yourself or have an accountant do this for you. If you do have an accountant on staff, it is advisable to make use of systems and software that can assist you in increasing the accuracy, compliance, and efficiency of your tax filing and calculations. 

Contact PaySpace to find out more about how your small business can easily comply with tax regulations.