Whether or not you register your business, it’s almost always compulsory to pay tax. There are a few exceptions that apply to small businesses and other exceptional cases, but generally, most trading businesses or entrepreneurs in South Africa have to pay tax from the get-go.
Small businesses, who are registered at the CIPC, don’t pay taxes if they earn less than R83 100 in taxable income over the financial year of 1 April 2020 to 31 March 2021. This threshold is R79 000 for the financial of 2019/2020. You can see exactly how much your business will pay depending on your taxable earnings on SARS’s website.
If you don’t have a registered company, but you’re already offering services or selling products, you’re considered a Sole Proprietor. This means, according to South African legislation, you and your business are one united entity. You need to submit your business income as part of your personal income.
In terms of personal income, if you earn R1 – 205 900 in taxable income over the financial year of 1 March 2020 – 28 February 2021 (note this period is different to the financial period for businesses) your taxation rate is 18%. For 2019 / 2020 the earning between R1 – 195 850 means you pay 18%. That’s the minimum.
The maximum for 2020 / 2021 is R532 041 plus 45% of the taxable income over R 1 500 000. This applies to anyone earning R1 500 001 or more. You can see how much you’d pay, relative to your taxable income, here on SARS’s website.