A brief overview of the responsibilities of running a close corporation
(For information purposes only)
A Close Corporation is a separate legal entity, which must submit its own tax returns and pay its own tax, apart from the members. The members are, in effect, employees of the Close Corporation and are required to be registered as Provisional taxpayers and submit their own tax returns.
An annual tax return must be submitted within 12 months of the year end of the Corporation.
Tax is payable as Provisional tax twice a year, the 1st payment due 6 months into the current tax year , usually 31 August and the 2nd payment due at the end of the current financial year, usually on 28 February in the year of assessment. A shortfall must be paid on assessment or by 30 September of the year of assessment, whichever comes first.
Example: Tax year 1/3/2009 to 28/2/2010:
- 1st provisional due 31 August 2009
- 2nd provisional due 28 February 2010
- 3rd payment due 30 September 2010
- Tax return due 28 February 2011
Lower rates of tax apply to small enterprises in certain conditions and you are strongly advised to consult with your tax consultant before embarking on any new ventures.
Any entity with a turnover in excess of R1 000 000 per annum is required to register as a Vat vendor. Entities with a lower turnover may register for VAT, providing they have turnover of at least R20 000 per annum.
Once registered for Vat, Vat returns and payments must be submitted every two months by the 25th of the month following the vat period.
PAYE and UIF
Even if you as the member are the only “employee” of your Close Corporation, the entity must be registered for PAYE and UIF. PAYE and UIF must be deducted from monthly salaries and paid across to SARS by the 7th of the following month.
CIPRO – The Registrar of Close Corporations requires that an Annual return be submitted each year in the month that CC was originally registered. This must be accompanied by an Annual Fee, currently R100. Non-submission could result is the closure of your CC.
All employers are required to register for Workmen’s Compensation.