Would you be registering a company or earning this income in your own name?
Freelancelotsays: 28 May 2013 at 11:04
Well, I guess I want to know what the pros and cons are for either?
TaxTimsays: 28 May 2013 at 11:12
Starting a company is costly and admin intensive while running a business in your own name is a lot easier. You will be able to deduct any expenses related to earning that income either way. However the tax rates are different. Income earned by a company is subject to tax at 28% while income earned in your own name is subject to tax at the marginal rate of individuals. So your decision could be based on the amount of income earned. In order to benefit from forming a company your overall income including your full time work should be in the region of over R450 000 per year.
Freelancelotsays: 28 May 2013 at 11:18
Okay, that rules out the possibility of me starting a company. Now, how do I monthly pay taxes on any freelance work that I may do? Or should I just keep a percentage of it and pay it to SARS at the end of the financial year?
TaxTimsays: 28 May 2013 at 11:33
If the "profit" figure is more than R20 000 per year then you would need to register as a provisional taxpayer and on your year end tax return record this income and related expenditure under "local business income"