Please share this article with a friend that has ever registered a business of some sort. Remember the article I wrote regarding the fact that its legal to run an unregistered business? If you have not yet read that one, (please read it here).
I personally, prefer to run my side hustle as a sole trader and trade in my own name. For example, my recent Driving School venture is “Klestina Armas Trading as Empower Driving school”. This way, I can still have a business name separate from my own name and run with it. The reason I do this is because of the admin associated with running a registered business.
As a sole trader, one can still get the benefits that a registered business gets such as obtaining a fitness certificate from the municipality, which is one of the pre-requisite to have before you can start running a business in any given town.
Assuming that you have already registered a business and whether it is operating or not, kindly do the followings because failure to do so may have negative financial consequences:
- Register your (Pty) or Close corporation with inland revenue as tax payer. A lot of the companies that offer registration services include this in their packages, but just ask them to give you your company’s tax certificate. If they cannot give it to you, your company is most likely not registered for tax and hence one must go to the receiver to register. There are not many procedures to be followed here, you just need your founding documents or incorporation certificates and certified copies of the shareholders’ ID or members’ ID in the case of a CC.
- If you are registered, you must bear in mind that you need to submit three returns during any particular financial year. Kindly note that there is a difference between a financial year and a calendar year. Your incorporation documents will have your financial year date on it. Common year end dates are December, February, March and June.
- The three returns in the point above must be submitted on or before the following dates:
- A) The first return is due 6 months into your financial year. If you have a 28 February year end, your first return is due 31 August each year.
- B) Your second return is due at year end. In the case of a February year end, it is due on the last day of February each year.
- C) The last return – which is your Annual return is due 7 months after February each year. In this case, 30 September.
Whether your business is making money or not, you must render the three returns. If your business is dormant i.e you are not trading, all you need is to fill in a zero return and cancel the sections that are not applicable.
If your business is trading but not making money (i.e you are trading at a loss), you must fill in a return but your tax payment or ultimate liability will be zero. Your losses may be carried forward to the following year.
And if your business is profitable, you must make provisional tax payment but get someone qualified to do the calculation for you so that you know you are paying the right amount.
What a lot of us do not know is that even if the receiver does not know about your business, if you register a company or a close corporation, there’s a record of when you started doing business. This is determined by your registration number. By default, if the receiver wants, they can track all registered businesses.
On the other hand, if you are registered and are not rendering any return, you are putting you and your company at risk of penalties and interests.
At high level, the following penalties can be charged:
- N$100 per day for every day that the return is due. (non- submission penalty) – This will affect you regardless of whether you are trading or not.
- 20% interest on late payment. If you are suppose to be paying tax and you do not, they will charge interest. This only affects profitable business.
My plea to you is to think of all the companies that you have registered. Are you submitting any returns? Do you still need those companies? try and sell the company/ies ? Or possibly deregister the company(ies)
Be a law abiding citizen and render your returns and pay your taxes.
Dhalondoka na Tuyeni