Schoemans are part of the Schoemans Group that includes Schoemans & Coetzee Audit – Registered Auditors in Cape Town and Acredo Quality Auditing, Accounting and Tax Compliance
Running a small business is demanding, and tax compliance often gets pushed to the side — until SARS sends a reminder, a penalty, or worse, an audit notice.
The good news? Most mistakes are easily avoidable with the right systems and guidance.
Here are the most common SARS mistakes South African SMEs make, and what you can do to prevent them.
Missing VAT, PAYE, or Provisional Tax Deadlines
Late submissions lead to:
- 10% penalties
- Interest charges
- A non-compliant tax status
This can affect tenders, loans, and credibility.
How to avoid it:
Use automated reminders, a tax calendar, or outsource your submissions to a professional.
Incorrect VAT Claims
Common errors include:
- Claiming VAT without valid tax invoices
- Claiming input VAT on non-deductible expenses
- Coding transactions incorrectly
- Claiming VAT from vendors who are not VAT-registered
How to avoid it:
Reconcile VAT monthly and work with an accountant to double-check claims.
Miscalculating PAYE
PAYE mistakes often happen when:
- Bonuses or commissions are processed
- Staff salaries change mid-year
- Incorrect tax codes are used
- Employee benefits aren’t reflected properly
How to avoid it:
Use reliable payroll software and ensure your payroll team is trained or supported by professionals.
Mixing Business and Personal Expenses
This is one of the biggest red flags for SARS audits.
It also makes bookkeeping messy and affects tax deductions.
How to avoid it:
Separate bank accounts and keep clear records for every business transaction.
Ignoring SARS Letters or Audit Requests
Not responding quickly can escalate matters — and SARS rarely sends letters “for nothing.”
How to avoid it:
Always open SARS mails, and if you’re unsure how to respond, get help immediately.
Underestimating Provisional Tax
Many SMEs make very low estimates, hoping to “deal with it later.”
This often results in large penalties after year-end.
How to avoid it:
Base estimates on real projections and update them as income changes.
Poor Record-Keeping
Missing invoices, incomplete ledgers, and disorganised documentation make SARS verifications extremely stressful.
How to avoid it:
Digitise documents and maintain organised, up-to-date files year-round.
Final Thoughts
SARS mistakes are common, but they’re also preventable. With accurate bookkeeping and proactive tax management, you can stay compliant and avoid unnecessary stress.
Frequently Asked Questions
What are the most common SARS mistakes SMEs make?
Common mistakes include missing tax deadlines, under-declaring income, claiming incorrect deductions, failing to keep proper records, and ignoring SARS correspondence. Each can lead to penalties, interest charges, or even an audit.
What happens if I miss a SARS deadline?
SARS automatically imposes penalties and interest on late payments. The penalty starts at 10% of the unpaid tax and can increase over time. Repeated late filings may also trigger compliance audits.
How can SMEs avoid SARS penalties?
Stay organised with a tax calendar, file returns on time, keep accurate records, and work with a qualified accountant who can track deadlines for you. Setting up a provisional tax payment plan also helps manage cash flow for tax.
What records should I keep for SARS compliance?
SARS requires you to keep all receipts, invoices, bank statements, payroll records, and tax certificates for at least five years. Good record keeping makes filing easier and protects you if SARS queries your return.
When should I hire a tax professional for my SME?
You should work with a tax professional from the start. As your business grows, tax becomes more complex — professional advice helps you claim all legal deductions, avoid costly mistakes, and stay compliant without the stress.
👉 Need help fixing past mistakes or preventing new ones? We’re here to help.