Tax guide for small businesses

Taxation in South Africa

What are your responsibilities as the director of a company?

As a director, you have numerous responsibilities that are assigned to you by the Articles of Association and company law.  A few of the important administrative responsibilities are discussed here, focused on the small business.

After setting up a limited company for contracting purposes, it is necessary to appoint at least one director and one secretary. As the beneficial owner/ shareholder and principle employee of the company, it is appropriate for you to be the sole company director.

Your main personal responsibility is to ensure that statutory documents are delivered to the Registrar of Companies as and when required by the Companies Act.

Should you fail to file your financial statements or annual returns, you, as a director, could be prosecuted personally.  Failure to deliver documents on time is a criminal offence. On conviction, a director could end up with a criminal record as well as a fine for each offence.  

As a director, you need to see to it that:

• You file your annual financial statements;
• You file you annual and provisional returns and pay taxes, including capital gains tax;
• You give notice to SARS of changes of directors’ and secretary or in their particulars (e.g. change of address);
• You give notice of change of the company Registered Office;
• You file EMP201 forms and pay over PAYE, UIF and SDL (where applicable) on time;
• You issue salary slips and IRP5 or IT3(a) forms at the end of each tax year;
• You file the Annual PAYE reconciliation (IRP501);
• You file your VAT201 forms and pay over VAT on time;
• You register for and pay other taxes duties and levies like STC and customs duty;
• Appoint an accounting officer, and in the case of a Pty Ltd, an auditor as well;
• You keep accurate records like:
• records showing the assets, liabilities, undrawn profits, revaluation of fixed assets and various loans
• a register of fixed assets
• detailed daily records of cash receipts and payments reflecting the nature of the transactions and the names of the parties to the transactions (except for cash sales)
• detailed records of credit purchases (goods and services) and sales refl ecting the nature of the transactions and the names of the parties to the transactions; and
• statements of annual stocktaking;
• You keep all supporting documentation in a safe place for at least 5 years;
• You keep all accounting records and supporting schedules for at least 15 years; and
• You file you own personal provisional and annual tax returns, and pay the taxes you owe, including donations tax and capital gains tax.