Complying with SARS is a crucial element of boosting your monthly cash flow.
Get it wrong and you face penalties and interest on late payments. That's a double whammy to your cash flow.
But that's just the tip of the iceberg.
There's one mistake Vat vendors are often tempted to make. But it's so deadly, it could force you to close down you entire business.
Find out what it is, so you can ensure your company doesn't make it!
Avoid this mistake: Never use Vat due to SARS to finance your business
According to The Practical Vat Loose Leaf Service, Vat vendors are often tempted to use the Vat they collect to finance their other business expenses.
Never do this in your company.
Not only can you end up in jail, but in time it'll bankrupt your business.
You see, the penalties and interest SARS levies amount to very high finance charges. And they don't qualify as deductions from income for income tax purposes, unlike a loan or bank overdraft used for business purposes.
In reality, the actual cost to you is almost double the amount you pay to SARS.
And once you fall into arrears with your Vat, you may never catch up again because of the penalties and interest incurred. That's because interest payable to SARS doesn't stop when the interest is equals to the tax outstanding amount.
For example, a Vat debt of R800 000 and R100 000 penalty will amount to over R2 million within 15 years!
SARS doesn't want its vendors using it as a personal financier. Therefore, it makes it costly to do so. 'Use your bank, use money lenders, use the Mafia if you have to, their terms are better,' says the Loose Leaf.