Your company isn’t immune to a tax audit. But you can reduce your chances if you do these five things…

Simangele Mzizi, Fsp Business, 23 Dec. 2014

Tags: tax audit, sars audit, audit, how to avoid a tax audit

A tax audit is one of the things your business can’t escape.

The taxman has wide ranging powers and can audit you even without notice.

When it comes around, it will turn your business upside down as it looks at each and every detail in your books.

But it’s not all doom and gloom.

The good news is you can reduce your chances of a tax audit. You just have to do these five things…

Five things you must do to reduce your chances of a tax audit

1. Keep a good financial/credit record
SARS looks at your financial information and will flag you for an audit if things don’t add up when it comes to your finances.
For example, if your company’s gross profit margin drops from 20% to 10%, SARS will get suspicious. And it would want to know why on earth would a company drop its profit margin by 50% in one year?

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2. Don’t miss any due dates
Missing deadlines and not paying your tax on time is a big red flag for SARS. And the harsh penalties it imposes for missing deadlines are an indicator that it doesn’t tolerate this at all.
So always stick to your tax deadline to avoid a tax audit by SARS. And meet all your obligations in terms of income tax, PAYE, Vat, etc.
3. Disclose your income correctly on your annual tax return
Always double check that everything is correct when you submit your return. Remember, this is a legally binding document.
4. Stay up to date with tax legislation
Ignorance of the law is not an excuse. If there’s a new tax law in place, familiarise yourself with it and comply.
5. Always issue valid tax invoices
Something as simple as getting your tax invoice wrong can trigger a full blown tax audit.
So always make sure you issue valid tax invoices. To find out what you must include in your invoice to make sure it’s valid, check out the Practical Tax Loose Leaf Service. The Loose Leaf Service also contains everything you need to know about tax audits.
As you can see, reducing your chances of a tax audit is all about complying with tax laws and being honest with your tax affairs. So be sure to do these five things to reduce the chance of a tax audit.




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