If you’re operating as a business or are self-employed, it’s important to register as a taxpayer with the South African Revenue Service (SARS). This ensures that you or your company can pay any tax owed as well as receive business benefits.
Once you’ve registered, you’ll get a unique tax registration number. This number goes on tax invoices and other important legal/accounting documents, and helps you keep track of how much you owe (or are owed back from the government).
How do I Register for a Tax Number? (For individuals)
Different processes apply to individuals and companies. As an individual, the only way you can be put on record for tax is by visiting a SARS branch where you’ll be entered into the system.
Make sure you have all the right documents with you as you’ll likely need to reschedule your appointment if you forget something. Set aside a few hours for registration as the process and queues can take a while, depending on which SARS branch you head to.
Documents you will need for registration include:
Proof of identity – This includes certified or uncertified copies of a valid identity document, a driving licence, passport, temporary identity document, asylum seekers certificate or permit together with the original identification documents. (An identity document, for example, includes the green barcoded book and the smart ID card.)
Proof of address – Only specific documents can be used. These include: utility accounts (water and lights), medical aid statements, telephone accounts, retail account statements and some others. Most must be less than 3 months old. For some, a maximum of 1 month applies.
Proof of banking details – This can take the form of an original bank letter not more than 30 days old. The letter must confirm the account holder’s legal name, account number, account type, branch code and the date on which the account was opened. Original bank statements are also acceptable, if less than 3 months old, and if they also confirm key information such as account type and account number.
How do I register for a Tax Number? (For companies)
The process of registering for a tax number will vary, depending on whether you intend to trade as a sole proprietor, as part of a partnership, or as a private company.
It is always helpful to understand the differences between these three ways to trade.
Sole proprietor – Sole proprietors are also known as ‘sole traders’. Sole proprietorships are a type of business entity which is owned and run by one person only and, importantly, where there is no legal distinction between the owner and the business. All profits and all losses go to the owner. While the owner doesn’t need to separately register the business with SARS, he or she does need to include the income from the business in their own individual tax return.
Partnership – Like sole proprietors, partnerships are also not regarded as separate legal persons or taxpayers. Each partner is taxed on his or her share of the partnership profits. All members of the partnership must be registered with SARS in their personal capacities.
Private Company – A private company is treated by law as a separate legal entity from its owners. Because of this fact, it must be registered as a taxpayer in its own right. It has a life separate from its owners with rights and duties of its own.
Private company owners need to register the formation of new companies with the CIPC – the Companies and Intellectual Property Commission.
For the owners of private companies, registering a new company through the CIPC website often leads to automatic SARS registration. If you register your company in this way, you will shortly receive an email from SARS informing you of your new company tax number.
Should you need to register for tax manually with SARS, you should use Form IT77C. This document asks for details such as your company’s trading name, public officer and tax practitioner’s details.
You are required to register with your local SARS office to obtain an income tax reference number within 60 days after you have commenced business.
Filing Taxes Online – SARS eFiling System in South Africa.
Once you receive your tax registration number, you can register to file your tax returns online using the SARS eFiling system. eFiling is convenient option allows you to submit your returns and declarations securely via the web, and it’s free. Register through the official eFiling portal. SARS also offers telephonic help from trained consultants if you get stuck while calculating your tax.
It is important to understand the types of tax you will need to register your company for. Depending on which tax type you are registered for – regular small business income tax, or turnover tax – your filing requirements will be slightly different. Businesses registered for ordinary income tax are required to submit two provisional tax returns every year, in addition to their regular income tax filing. Companies that are eligible and registered for turnover tax have simplified tax return requirements. However, there are also additional tax types to consider. As your business grows, it is wise to consult with a company advisor or accountant to understand these tax types in more detail.
With QuickBooks cloud accounting solutions, it’s easy to keep track of all your business finances. With a detailed view of all your sales, business expenses and profits, it’s easy and straight-forward to file your tax return – whether you choose to eFile yourself, or whether you use an accountant to help you.
The business tax return form in South Africa is called the ITR14. You can file your company income tax return online via the convenient eFiling portal or at a local SARS branch.