Frequently Asked Questions

1I want to start up my own business. What should I do? I am told to register at the city council for a permit. Please help!
Anyone can start up a business. Registration at the city council is not necessary, except in certain circumstances. One can trade as a sole proprietor, or form a trading entity i.e. private company.
2Do I have to register for VAT?
Only if your business turnover exceeds R1 000 000 per annum, registration is compulsory. One may register on a voluntary basis if turnover is less than R1 000 000.
3What else should my business is registered for?
Apart from income tax, and depending on your business, one should register for:

UIF - (Unemployment insurance fund)
PAYE - (Employees tax)
WCA - (Workmen’s compensation)
SDL - (Skills development levy)
4I have been told that a business may not show profits during the first few years
Anyone who is in business to lose money should rather do nothing and sit at home. To pay tax, means that you made money. To grow your business, one needs money. Rather make it your goal to be profitable from day one.
5What is Capital Gains Tax?
Capital Gains Tax is not a separate tax system. It is merely a way to tax profits on gains not of an income nature. It is calculated using a base cost, which is subtracted from the proceeds. Certain exemptions apply, and one may choose from a few methods to calculate the gain to be included in the year’s taxable income.
6Should one draw up a will?
It is a good idea to draw up a will as soon as you have assets and liabilities.
7Should all workers contribute to the Unemployment Insurance Fund?
All employees working more than 24 hours per month should contribute to the Fund.
8What is regarded as earnings for UIF?
All monies received from the employer, whether in cash or in kind, except for commission are regarded as earnings and contributions must be paid on them. All allowances that are received are regarded as earnings and are liable for contributions. Examples of allowances are travelling allowances, entertainment allowances as well as food and accommodation allowances.
9Is there a limit up to which you have to contribute to the Unemployment Insurance Fund?
Yes there is a limit. The limit exist for a total monthly earning of R 14 872.00, which means that a person earning more than R 14 872.00 per month will only contribute R 148.72 (1% on the total earnings of R 14 872.00) to the Unemployment Insurance Fund.
10Are directors and members included in the Workmen’s Compensation Benefit?
Yes, the salaries of directors and members should be included on the W.As08 form.
11How are the workman compensation assessment figures calculated?
The workmen’s compensation commissioner uses a formula based on estimated salary and wages figures for the next year. This should also include directors / members’ salaries.
12When should I register as a taxpayer?
If you answer yes to any of these statements you should register for tax:
If your earnings exceed R 120 000 per annum and / or
If you have your own business, and / or
If you earn rental income, or interest, in excess of R 10 000 per annum.