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How do I go about starting a business?

Posted 16 January 2013 under Tax Questions

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Morning... I'm thinking of starting my own business - what should I do first? How much must the business earn per month to pay tax?

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TaxTimTaxTim says:
16 January 2013 at 13:02

It would depend on what type of business you are running, what will the business be doing?

Normal company tax is 28% of taxable income (income less deductions for tax purposes) regardless of how much the "profit" is. However some small businesses can pay no tax on the first R63 556 taxable income with favourable tax rates.

Nadine says:
16 January 2013 at 13:37

I'm starting an advertising magazine.
If my calculations are correct and if everything goes according to plan the magazine can make - R40 000 per second week (R80 000 per month). After that the printing and distribution needs to be paid, also the staff, telephone, rent and other expenses.

So do I pay tax on the R80 000 per month (Tax R22 400) or do I pay tax after expenses is paid?
Also If i want to register my company, how should I do it and where?
Sorry if this questions sound stupid, just new to it all.

TaxTimTaxTim says:
16 January 2013 at 15:03

In order to register a company you can do one of two things:

1. Buy a shelf company from a legal firm or similar which could cost about R2 000 or go to www.cipc.co.za and you can download the forms and register a company yourself for about R475.

After that you would need to get a bank account then a tax number by submitting an IT77c to SARS as well as potentially register to pay PAYE by filling out a EMP401 and submitting to SARS.

Regarding the tax, if you qualify as a small business corporation then the tax payable is as follows:

Taxable Income (R) Rate of Tax (R)
0 ?%u20AC%u201C 63 556 0%
63 557 ?%u20AC%u201C 350 000 7% of the amount above 63 556
350 001 and above 20 051 28% of the amount above 350 000

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