If you’re a small business owner this tax advice is for you.

You could qualify as a small business corporation or SBC as we call it.

This company has reduced tax rates and increased depreciation write-offs.

It’s not a different type of company it’s just got a different tax status.

If you qualify you don’t pay tax at 27% you pay tax at a sliding scale and the first bracket is taxed at 0%.

To qualify as a small business corporation:

Your turnover should be below R20 million year.
All shareholders need to be natural persons; no trusts may be company shareholders – they need to be real human beings.
Shareholders can only hold shares in one private company.
Less than 20% of your income must come from investments: income such as interest, dividends and rental income.
You cannot be a personal service provider unless you have three full time employees throughout the whole year.

Instead of paying 27% from the first year, you will pay 0% on the first R99,000 profit and reduces rates up to R550,000 profit.
Let’s say your company makes a profit of R550,000. With a normal company that would be about R150,000 in tax, but applied to a small business corporation that would amount only to about R60,000 which means a R90,000 saving.
You also get benefits on the depreciation of assets, for example, on a vehicle. Instead of writing it off over five years at 20% per year, a small business corporation gets to write it off over three years at fifty percent, fifty percent and twenty percent.

Small business tax isn’t about being clever it’s about knowing the rules and structuring it correctly from the start.

Contact Marwann Noor: 0834542149