24/11/2016
The basics about VAT
The tax that seems to scare most new business owners seems to be VAT. This is possibly because it requires a lot of administration to manage it. The amounts involved also tend to be quite significant, so it is not something that can be ignored without serious consequence.
June 2015- SARS guide; point worth noting;
Business turnover of less than R 1000 000.00(one million) for the most recent 12 twelve) months, does not require a business to register for VAT. Turnover from R 1000 000.00 (one million) and above requires that a business registers for VAT.
Turnover less than R 50 000( fifty thousand) rand for the past 12 months result in no requirement to register for VAT, which is why most new businesses cannot register for VAT for the first few months. Should the 12 (twelve) month turnover be between R 50 000(fifty thousand) rand and R 1000 000.00 (million) rand, the business owner then has a choice whether to register for VAT or not. Should the business only make exempt supplies, then it does not qualify to register for VAT.
The registration process is too procedural to address as part of this information sharing. Details are available on the SARS website. It involves filling out a form and submitting various documents about the business, its owners, managers, premises and banking details etc. For this a SARS branch needs to be visited.
Once registered, the business is required to display its VAT number on all sales invoices. VAT number should also be printed on all invoices received from VAT registered suppliers. Customers will be charged an extra 14% on invoices, this portion is VAT. (NB: You cannot charge VAT if you are not registered) the 14% does not belong to the business or the business owner, it must be kept t aside to be paid over to SARS.
As a VAT registered business, you become a VAT tax collector on behalf of SARS. As a VAT registered entity, every two months the business has to calculate how much VAT was collected from customers. The VAT which suppliers levied from our business is also calculated. Deduct the supplier’s VAT from your sales VAT and this difference the business has to pay over to SARS. This happens after completing form on e-filing (Yes, the business have to register for e-filing in order to do this).
The above is a very basic summary of the VAT registration and filling process. It could get more challenging, for start-ups we hope this helps. Please remember not to spend the VAT which is collected from your customers, it will need to be paid over to SARS – it is not your money. You are just collecting it on behalf of SARS.
For more detailed information please visit the SARS website.
Best wishes.
The MJED Team, We are passionate about your business growth.
011 534 3985; [email protected]
