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Tax for a small home business in South Africa

A home business does not need a company to owe tax. If you sell for a profit, SARS expects you to declare it. Here are the taxes a small business may meet, and how to stay out of trouble.

Tax rules and thresholds change. The figures here are the ones the book gives for 2026, so check the current ones on the SARS website or with a registered tax practitioner.

The taxes a small business may meet

• Income tax. A sole proprietor pays it on the business profit, as part of personal income. A company pays company tax.
• Provisional tax. Paid in advance by people and companies with income other than a salary.
• Turnover tax. A simpler tax that micro businesses may choose in place of income tax on business profit.
• VAT. For businesses with sales above the threshold, or that register voluntarily.
• PAYE, UIF and SDL. For businesses that employ people.

Register first

Most people who have worked already have a tax reference number. If you do not, register with SARS on eFiling, on the SARS MobiApp, or at a branch by appointment. Register for eFiling so that you can file and pay online.

Income tax for a sole proprietor

Your business is part of your personal tax. At the end of each tax year, which runs from 1 March to the end of February:

• declare all the business's income, whether cash, card or EFT, and its expenses on your personal tax return;
• the profit is added to any other income, such as a salary, and tax is worked out on the total;
• if your total taxable income is below the tax threshold, you pay no income tax, but you may still need to file.

You may deduct expenses incurred in earning the business income, if you have proof. Household costs are not deductible. A workroom at home is deductible only under strict conditions.

Provisional tax

If you earn income other than a salary, you may be a provisional taxpayer. You pay in advance, on an estimate, by the end of August and the end of February. Estimating too low brings penalties.

Turnover tax

According to the book, from 1 April 2026 turnover tax is open to micro businesses with a turnover of up to R2.3 million a year. It taxes turnover on a sliding scale that starts at 0% for the first R600 000. It is simple and suits businesses with low costs, but it has exclusions and registration deadlines. Compare both systems before you choose.

VAT

VAT is 15%. The book gives the compulsory registration threshold as R2.3 million of taxable sales in 12 months from 1 April 2026, with voluntary registration from R120 000.

Good habits

• Keep your records for five years.
• Put money aside for tax every month, in a separate "tax pot".
• Keep your tax compliance status up to date. Customers and tenders often ask for it.
• Use a registered tax practitioner.
• Ignore messages that claim to be from SARS and contain links or threats.

This guide is based on Chapter 5 of Starting a Small Business from Home.