Don't pay R80 000 or spend two years in jail because you didn't know these two Vat registration rules
If you must register for Vat but don't, SARS could hit you with an R80 000 fine or two years in jail. It will also make you pay all the Vat your business owes.
Luckily, you can avoid all this if you know the two Vat registration rules and follow them.
Read on to find out what they are so you can comply.
Rule #1: Find out if your company is an enterprise or not
Two rules you need to know about Vat registration
'Operating an enterprise is a basic requirement to register for Vat (section 1 of the Vat Act)
,' says the Practical Vat Loose Leaf Service.
If your business ticks the following boxes, you run an enterprise and must
register for Vat:
Your business carries on any activity where you supply goods or services;
This activity is on a continuous or regular basis;
You carry on this activity in SA or partly in SA; and
You get consideration for the supply of your goods or services.
Don't take up to six months to register for Vat! Here's how to do it the same day
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One of the biggest problems with Vat registrations is not having the right supporting documents and not complying with SARS requirements. The registration process can take up to six months for some companies.
Well it doesn't have to be a problem for you.
I have a solution to ensure you walk into a SARS office 100% prepared for your Vat registration.
Rule #2: If you run an enterprise, check your turnover to see if you qualify to register for Vat
Your turnover is another important Vat registration requirement.
In this article
, we explain that once you're sure your business is an enterprise, you need to check your turnover over any 12-month period (not a financial year). And you must register for Vat if:
You reach the R1 million turnover threshold.
Your business is non-resident, you supply goods or services in South Africa and your supplies exceed R1 million.
Your business is non-resident and supplies electronic services with a value of more than R50 000 in a 12-month period.
Note: If your business's taxable turnover exceeds R50 000 over a 12 month period, you can register for Vat voluntarily.
When it comes to Vat registration, it's best you do it early
After you register for Vat, SARS gives you a Vat number.
Generally, the waiting period for a Vat number is about 21 business days. So it's best to start the process early. This way, you avoid the nuisance of trading without a Vat number.
Now that you know these two rules, register for Vat if you qualify and avoid an R80 000 fine or two years in prison.
To get three more Vat registration
rules, check out The A-Z of Vat Registrations.
The A-Z of Vat Registrations also gives you:
Eleven tips for an easy Vat registration;
Two circumstances you must avoid to ensure SARS doesn't have an excuse not to give your Vat number;
A page by page guide that will show you where all your information needs to go on your VAT101 form;
A checklist of supporting documents SARS wants when you register for Vat; and
So much more.