Your tax admin becomes more complicated at certain points, and errors at those points cost more. If you recognise them in advance, you can bring in an accountant before the new obligations start. These are the five points that apply in South Africa.

Registering a Pty Ltd

When you incorporate a company, your obligations change. A sole proprietor's income is part of their personal tax return. A company is a separate legal person with its own filings. It must keep accounting records, file an annual company income tax return (ITR14) and submit a CIPC annual return within 30 business days of each anniversary of incorporation. The CIPC return is separate from tax. It confirms the company is still active, and missing it repeatedly can get your company deregistered.

There's also a tax decision to make early. Companies pay income tax at 27%, but a qualifying Small Business Corporation is taxed on a sliding scale of 0%, 7%, 21% and 27% , which can lower your tax in the early years. Setting this up from the first year is simpler than correcting it later. (These are the current SARS rates; SARS adjusts them annually.)

If you've just registered a Pty Ltd, put your CIPC annual return in your calendar now. It is due within 30 business days of your incorporation anniversary, every year. Filing costs little, and missing it can lead to deregistration.

Hiring your first employee

When you put someone on a formal payroll, you start a monthly cycle of returns and payments with fixed deadlines and penalties for lateness.

  • PAYE: you deduct employees' tax and pay it over to SARS, declared on an EMP201, due by the 7th of each month.
  • UIF: unemployment insurance contributions of 2% in total (1% from you, 1% from the employee), applied on remuneration up to the monthly earnings ceiling of R17,712.
  • SDL: the skills development levy of 1% of your payroll, which applies once your total annual payroll is expected to exceed R500,000.
  • You'll also need to register as an employer with SARS, and reconcile everything twice a year in the EMP501 submissions.

All of this is compulsory and due on fixed dates, and errors affect your employees' pay as well as your own position with SARS. (Thresholds like the UIF ceiling are set by government and reviewed periodically.)

Approaching the R2.3 million turnover tax limit

South Africa has a simplified regime called turnover tax, aimed at micro-businesses with turnover of R2.3 million or less a year (R1 million before the 2026 Budget). It replaces income tax and provisional tax with a single tax based on your turnover, and it's elective, so you opt in. For a very small, simple business it reduces the admin.

Whether turnover tax costs less than normal tax, including the Small Business Corporation rates, depends on your margins. A high-turnover, low-profit business and a low-turnover, high-profit business get very different results. As you approach R2.3 million you will leave the regime, and you need a plan for the move to normal tax. Send us your figures before you decide either way.

Reaching the VAT threshold

VAT in South Africa is 15%. You are legally obliged to register once your taxable turnover exceeds R2.3 million in any rolling 12-month period (this compulsory threshold applies from 1 April 2026). You may also register voluntarily once your turnover passes R120,000, which can suit a business whose customers are VAT-registered and which wants to claim input VAT back.

The R2.3 million test is on a rolling 12-month basis and does not follow your financial year, so check it every month. If you pass it without noticing, you register late and SARS charges backdated VAT and penalties. Once registered, you file VAT201 returns every period, keep valid tax invoices and reconcile input and output VAT, with penalties for late or incorrect returns.

Checking the rolling total

Sipho's catering business has been growing. Month by month his taxable turnover for the past 12 months reads R1.9m, then R2.1m, then R2.25m. He's not registered for VAT and assumes he is below the threshold because his financial year only started recently. The R2.3 million test is a rolling 12-month figure, and two months later a large festival contract takes his rolling total to R2.4m. He was legally required to register from that point. Because he didn't spot it, he registers late and faces backdated VAT and penalties on turnover he never charged VAT on. An accountant checking the rolling total each month would have warned him months earlier and registered him on time. (The R2.3m compulsory threshold applies from 1 April 2026; SARS sets and reviews these figures.)

Receiving a SARS letter

SARS may send a verification request, an audit notice, an assessment you disagree with, a penalty or a query on your provisional tax. SARS correspondence has deadlines, and a wrong or late response can turn a small query into a larger dispute.

Have an accountant read the letter before you respond. If you're not sure what a letter is asking, forward it to us and we'll explain what it asks and what to send.

What the five have in common

Each of these five adds a new deadline, a new penalty or a new decision with money attached. You register a company and gain CIPC and ITR14 deadlines. You hire staff and gain the monthly EMP201 with PAYE, UIF and SDL. You reach the turnover-tax or VAT threshold and gain a new cycle of returns. You receive a SARS letter and have a deadline to reply. Bring in an accountant before one of these happens.