Tax is where small businesses most often lose money without doing anything wrong. Not through avoidance, but through missing a deadline nobody diarised, registering for something they did not need, or never discovering a regime that would have suited them better.
Two thresholds moved on 1 April 2026 and both matter to smaller businesses, so if you last looked at this a year ago, the answers have changed.
This is a working map of what a business has to file and when. It is general information, not advice on your own situation, so let your accountant handle the route.
Register the business with SARS first
A company registered through the Companies and Intellectual Property Commission is issued an income tax number automatically through the CIPC and SARS link. You still need to confirm it and set up eFiling access.
If you trade as a sole proprietor there is no separate business registration. The business income goes into your personal tax return, and you will almost certainly become a provisional taxpayer as a result.
Set up eFiling properly at the start, with the right person as the registered representative, because correcting who controls a profile later is slow and requires supporting documents.
Provisional tax and the deadline people miss
Most business owners are provisional taxpayers, which means paying tax during the year on estimated income rather than settling it all afterwards.
For a February year end there are two compulsory payments: the first by the end of August, the second by the last business day of February. An optional third top-up payment can be made afterwards to reduce interest where your estimate fell short.
The August one is the deadline small businesses most often miss, usually because nobody put it in a calendar. Underestimating carries penalties and interest, so the estimate deserves real attention rather than a repeat of last year’s number.
VAT: the threshold changed
VAT is charged at 15% on taxable supplies by registered vendors.
Compulsory registration now applies once your taxable turnover passes R2.3 million in any consecutive twelve month period, raised from R1 million on 1 April 2026. Voluntary registration is available from R120 000 a year, raised from R50 000.
That is a real change for growing businesses. A business turning over R1.5 million a year was previously required to register and now is not. Registration is not automatically bad, since a registered vendor claims input VAT on purchases, but it brings filing obligations and it changes your pricing to consumers. If you are near the threshold, decide deliberately rather than drifting across it.
Registered vendors file according to the tax period SARS assigns, most commonly every two months, with submission and payment due by the due date for that period. Keep your records reconciled as you go, because catching up on a year of VAT is where the expensive mistakes happen.
Turnover tax, the regime most micro businesses miss
Turnover tax is a simplified system for micro businesses and it is consistently overlooked.
Instead of calculating profit, you pay a small percentage of turnover, and it replaces income tax, VAT, provisional tax, capital gains tax and dividends tax in one payment. A business can elect to stay registered for VAT if that suits it.
This also changed on 1 April 2026. Qualifying turnover rose from R1 million to R2.3 million a year, and the tax-free band rose to the first R600 000 of turnover, with rates stepping up to a maximum of 3%. The current bands are published on the SARS site and are worth checking against your own numbers.
It is not automatically the better answer. You are taxed on turnover whether or not you made a profit, so a thin-margin business can be worse off. Run both calculations before electing.
Payroll taxes once you employ anyone
Employing even one person changes your filing obligations immediately.
Register as an employer, deduct PAYE from salaries and pay it over monthly with the EMP201 declaration. Alongside that sit UIF contributions, the skills development levy once your payroll passes the relevant threshold, and returns to the Compensation Fund.
There are also employer reconciliation submissions during the year, where what you declared monthly has to agree with what you actually paid and with each employee’s tax certificate. Payroll is the area where outsourcing pays for itself soonest, because penalties for late or incorrect submission accumulate every month.
If you employ younger, lower-earning staff, check whether the employment tax incentive applies. It reduces the PAYE you pay over and costs the employee nothing.
The annual return
A company submits an annual income tax return after its financial year end, supported by annual financial statements.
Companies also file a separate annual return with CIPC, which is a different thing from the SARS return and is about keeping the company in good standing. Missing it repeatedly can lead to deregistration, which is a slow and expensive thing to reverse.
Diarise both. They are unrelated obligations to unrelated bodies and people routinely assume one covers the other.
Records are the part that gets neglected
SARS requires supporting documentation to be retained, and a deduction you cannot evidence is a deduction you may lose on review.
Keep invoices issued and received, bank statements, payroll records, an asset register and your VAT workings in order as you go. Reconstructing a year of them in a hurry is how small businesses end up paying more than they owed.
Cloud accounting software makes this dramatically easier and is the single subscription most businesses should carry. Whichever you choose, the practical advice is to use the one your accountant already works in, because the gain comes from them having direct access to clean books. Tools such as Sage are built for local compliance requirements.
Tax clearance and why it matters commercially
Your tax compliance status is not only a compliance matter, it is a commercial one.
Funders ask for it, corporates ask for it before onboarding you as a supplier, and public sector tenders require it. A business that has drifted out of compliance discovers it at exactly the wrong moment, usually mid-application.
Check your status on eFiling periodically rather than assuming. Fixing an outstanding return quietly in your own time is far cheaper than fixing it under deadline pressure with a contract waiting.
Frequently asked questions
When must a small business register for VAT?
Once taxable turnover passes R2.3 million in any consecutive twelve month period, a threshold raised from R1 million on 1 April 2026. Voluntary registration is possible from R120 000 a year.
When is provisional tax due?
For a February year end, the first payment is due by the end of August and the second by the last business day of February, with an optional third top-up afterwards.
What is turnover tax and should I use it?
A simplified regime for micro businesses with qualifying turnover up to R2.3 million, replacing income tax, VAT, provisional tax, capital gains tax and dividends tax. The first R600 000 of turnover is taxed at nothing. It taxes turnover rather than profit, so run both calculations first.
Do I need to register as an employer?
Yes, as soon as you employ anyone. That brings monthly PAYE submissions, UIF, the skills development levy once your payroll passes the threshold, and Compensation Fund returns.
Is the CIPC annual return the same as my tax return?
No. They are separate obligations to separate bodies. The CIPC return keeps the company in good standing, and missing it repeatedly can lead to deregistration.
Further reading
Originally published in June 2023. Updated September 2026 with the VAT and turnover tax thresholds that changed on 1 April 2026. Rates, thresholds and deadlines change with each Budget, so confirm current figures on the SARS website or with your accountant. This is general information and not tax advice.
