When starting a business, it’s natural to place all your focus on issues related to your bottom-line – issues such as production, operations and everything that affects your profit margin. However, many new and not-so-new business owners tend to forget to pay as much attention to compliance and regulation issues, often with dire consequences…This is often due to lack of accounting knowledge and oversight, which are vital perspectives for building a sustainable business.

Some compliance areas that are important to consider include:

1. CIPC Annual and Beneficial Ownership Returns:

Companies and close corporations must file annual returns with CIPC within 30 business days of their registration anniversary to update company details. Beneficial ownership returns require companies to disclose information about their ultimate beneficial owners to enhance transparency and prevent illegal activities.

2. Income Tax:

Businesses must register for income tax with the South African Revenue Service (SARS) upon registration with the Companies and Intellectual Property Commission (CIPC). Sole proprietors must manually register. Income tax returns are due annually within 12 months after the end of the business’s financial year. Partnerships have different reporting requirements, with each partner declaring their share of income and expenses.

3. Provisional Tax:

This system requires businesses and individuals to pay their estimated income tax liability in advance through two (or three) instalments during the tax year. The first instalment is due within six months of the start of the assessment year, with subsequent payments typically due on 28 February and optionally on 30 September.

4. VAT (Value Added Tax):

Businesses with an annual turnover exceeding R1 million must register for VAT. Those with turnover below R30 million submit VAT returns bi-monthly, while those above R30 million do so monthly. The standard VAT rate is 15%, applied to most goods and services, unless exempted or zero-rated.

5. PAYE (Pay-As-You-Earn):

– Employers must withhold income tax from employees’ salaries and remit it to SARS monthly. Employers are required to submit Monthly Returns (EMP201) by the 7th of each month and annual reconciliation returns (EMP501). Employees receive IRP5/IT3(a) certificates detailing their earnings and deductions.

6. Skills Development Levy (SDL):

Employers with annual remuneration exceeding R500,000 must pay SDL at a rate of 1% of total remuneration. The levy supports skills development initiatives and training programs managed by Sector Education and Training Authorities (SETAs). SDL is remitted to SARS monthly via the EMP201 return.

7. UIF (Unemployment Insurance Fund):

Employers must contribute to UIF to provide financial support to employees who become unemployed or are unable to work due to illness, maternity, or adoption. Contributions are remitted to SARS monthly. Employers need to register with both the Department of Labour and SARS.

8. Workmen’s Compensation:

Under the Compensation for Occupational Injuries and Diseases Act (COIDA), employers must register with the Compensation Commissioner and pay an annual assessment fee based on total employee earnings. This fund provides compensation for workers injured or contracting diseases at work.

9. BBBEE (Broad-Based Black Economic Empowerment):

BBBEE compliance aims to promote economic transformation and increase the participation of black South Africans in the economy. Compliance is assessed via a scorecard system that evaluates areas such as ownership, management control, employment equity, skills development, and procurement. The BBBEE level impacts eligibility for government contracts and business opportunities.

In conclusion, navigating the regulatory landscape in South Africa can be complex. Seeking professional guidance is essential. Structured Capital Solutions offers expert assistance to help businesses manage compliance requirements effectively, ensuring you stay on top of regulatory obligations and focus on growing your business.