3 Ways to Save Up on Taxes

3 Ways to Save Up on Taxes

As a business owner, you can’t refuse to pay taxes, but they do take a huge cut out of your revenue. But there are legal ways by which you can cut some of the losses due to tax payments. Here’s how you can do it, entirely legally:

Putting Money in A Retirement Fund

You can make tax-deductible contributions to various retirement funds, such as a pension, provident, or retirement annuity. You can contribute at most R350,000 each year or around 27.5%of the taxable income. Depending on the contribution, you’ll receive a certain tax deduction.

As your employer sets most of the pension and provident fund contributions, you can use a retirement annuity fund and add more to it yourself. People prefer this as it’s a great way of maintaining some savings for rainy days, and you reduce taxes. Do note you can’t use this money until you’re 55.

Make the Most of Tax-Free Savings Account

Many banks provide savings accounts where your money is invested in different financial instruments, such as bonds, deposits, and more. The capital gains and dividends you gain from these are tax-free, and you don’t pay any taxes if you withdraw the amount or if there’s an investment growth. You won’t be able to invest more than R500,000 over the lifetime contribution, and there’s an annual limit of R36,000 over the tax year.

You can have multiple accounts, but the same aforementioned limits apply, and the limits will be split across the accounts.

Donating to a SARS registered charity

Various organisations across South Africa do charitable work in numerous fields, often referred to as Public Benefit Organisation (PBO). SARS allows these organisations to not pay taxes in the country for the various donations they get.

A tax expert working

You can get tax deductions for any donations you make to a PBO, provided that it’s 10% of the taxable income. If it goes above the amount, you can carry this deduction for the next tax year and claim it. Working with a SARS-approved PBO is an excellent way of reducing taxes.

With the right tax preparation services, businesses can bring down various costs and operate more independently. If you’re a business owner in South Africa and require professional bookkeepers for hire,business payroll services, VAT accounting services, business accounting services, and company registration services in South Africa, ANM Auditors can assist you. They’ve worked with companies of varying sizes and different industries. Get in touch with them today.

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