SME compliance in SA: What every small business should know

Motumi Tsoeute | image supplied

Motumi Tsoeute, senior compliance specialist at Sage Africa and Middle East, outlines key areas SMEs must get right:

Formally registering your company with the Companies and Intellectual Property Commission (CIPC) separates your personal and business finances and limits your legal liability.

Once registered, SMEs must file annual returns and report any changes to company information such as ownership, directorship or registered address.

All businesses must be registered with Sars for tax purposes. Registered companies are issued with an Income Tax number and must file annual returns and provisional tax. Accurate records, including a balance sheet and income statement, are required.

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If you generate taxable supplies exceeding R1m per year, VAT registration is mandatory. For supplies under this threshold but over R50,000 in the past 12 months, voluntary registration is possible. VAT submissions and payments are done according to a schedule set by Sars.

Employers must also register for Pay-As-You-Earn (Paye) and submit monthly and bi-annual returns. Additional payroll-related taxes, including the Skills Development Levy (if annual payroll exceeds R500,000) and Unemployment Insurance Fund (UIF), must be considered.

SARS eFiling is essential for managing submissions, and SMEs working with tax practitioners must ensure all information submitted is accurate.

Labour legislation

Employers are bound by the Basic Conditions of Employment Act (BCEA), which covers hours of work, overtime, leave and employee dismissal. SMEs must also comply with the National Minimum Wage and any bargaining council agreements that may apply.

Consumer and data protection

Laws like the Protection of Personal Information Act (POPIA), Consumer Protection Act and GDPR govern how SMEs interact with customers, advertise products, manage personal data and handle returns.

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Accurate, real-time recordkeeping is critical for compliance. Cloud-based accounting and payroll tools help SMEs maintain financial records, track taxes, send invoices and issue payslips. These systems also update automatically with legal changes.

Avoiding penalties

The risks of non-compliance include legal action, fines, reputational damage and SARS scrutiny. SMEs are encouraged to:

"Compliance isn’t just about ticking boxes—it’s the foundation of a sustainable business," says Tsoeute. "It helps SMEs build trust, protect their operations, and set themselves up for long-term success."

EA), which covers hours of work, overtime, leave and employee dismissal. SMEs must also comply with the National Minimum Wage and any bargaining council agreements that may apply.