The Best Financing Tips for the End of the 2024 Tax Season

With the end of the 2024 financial year just past, it’s a time that small business owners tend to brush up on their tax acumen. The world of tax is complex, and diving in can feel precarious for the average entrepreneur. Fortunately, you don’t have to be a full-blown financial professional to get the most out of your tax return. With a few of our best financing tips, you’ll be well on your way to trimming costs and submitting stress-free tax returns. 

Tip 1: Avoid penalties from SARS

Given the relatively recent changes made to the Tax Administration Act, ensuring that your business is SARS-compliant should be a top priority. As of December 2021, SARS can levy administrative penalties if a taxpayer has even one outstanding tax return from 2021 onwards. 

These penalties are fixed and can be charged monthly for up to 35 months (47 months if the taxpayer’s address is unknown). As a once-off fee, they don’t look so bad. But unpaid penalties stack up and, unless the business has a financial safety net in place to clear the backlog, they can quickly accumulate into a financial ball and chain. 

The fixed penalties are calculated according to this table: 

Assessed loss or taxable income for the preceding year	Penalty
R0 – R250 000	R250
R250 001 – R500 000	R500
R500 001 – R1 000 000	R1000
R1 000 001 – R5 000 000	R2000
R5 000 001 – R10 000 000	R4000
R10 000 001 – R50 000 000	R8000
R50 000 000+	R16 000

Let’s put this into a fictional scenario. Let’s say that your business brought in a taxable income of R5 million for the previous year of assessment and you’ve got two outstanding tax returns. SARS will levy a penalty of R2000 for each return that remains outstanding, bringing your penalty expense to R4000 a month, to be paid in addition to the principal amount outstanding. If this goes on for 35 months, you’re looking at amassed penalties to the value of R140,000. 

Now, that’s a bill that no entrepreneur wants to be stuck with, least of all with a growing business to feed. The best way to avoid incurring an administrative fee from SARS is by paying your taxes well before the deadline. But we also know that things don’t always go as planned, especially in the unpredictable world of a growing business. 

That being said, the growth of your business shouldn’t have to suffer simply because of a missed deadline. When you have fast and flexible access to SME-tailored funding solutions, you don’t have to sacrifice cash flow for the sake of compliance. 

Tip 2: Keep your ducks in a row from the get-go 

Leaving your tax to the last minute is tempting, but not advised. This is a task that is best chipped away at consistently, not demolished in a day’s work. With that in mind, here are some general tips to help your business prepare for the conclusion of the tax year: 

• Update your financial records regularly; keep systems for daily, weekly, monthly, and quarterly records 
• Collect and organise your invoices and receipts into an ordered system 
• Keep a well of tax funds aside; set taxes aside each month and forecast your annual tax contributions before the end of the financial year arrives so that you can budget comfortably for the expense 
• Keep track of important deadlines and due dates. Late tax payments and returns can result in penalties 

Tip 3: Outsource or complement your financial services  

Don’t underestimate the value of hiring a financial professional to take care of the number crunching for your growing business. Not only can it help you keep tabs on compliance and reduce costs, but delegating time-intensive tasks like accounting can actually help you foster your passion for business. 

Whether you have a financial professional on board already or if that’s on the business wish list, using accounting software can help you optimise your tax records, collect and systematise your invoices and receipts, and produce more accurate and efficient financial reports. Bonus: Bridgement’s innovative fintech plugs directly into your accounting software to quickly determine the terms of your facility with us. That means no lengthy paperwork. Just an online application that takes less than two minutes to complete. 

Tip 4: Prune costs with employment tax incentives (ETI) 

In 2021, employment tax incentives were introduced to encourage the employment of young job seekers currently facing exclusion from the workforce. ETIs represent a mutually beneficial opportunity to equip hardworking youth with skills and job experience while pruning tax-related expenses. 

ETI essentially reduces the cost of hiring by sharing the cost of PAYE with the government. Employee salaries are unaffected. There are limitations to when and how ETI can be deployed but if your business hires employees who earn between R2000 and R6500 per month, you may qualify for a tax break. You can read more about what qualifies a business for ETI by referring to this article. 

The bottom line: Prioritise compliance and get help from the right places 

Remaining compliant with SARS might take some foresight and careful planning but, with the right tools and the right people in your corner, it’s not difficult to sustain growth while paying the piper. Speak to Bridgement about fast and flexible funding solutions that protect your cash flow, even as you take on new expansion opportunities.