4 top tips to make tax season a breeze
There are *tons* of perks to being a freelancer, from having more flexibility and more control over your working life. One thing that isn’t a perk, however, is the amount of admin you’ll have to contend with on an almost daily basis.
People who work regular nine-to-fives generally have the luxury of an HR department that makes sure they get paid and have PAYE automatically deducted from their gross salary without even going near their bank account, keeping the South African Revenue Service paid up and off their case. As a freelancer, you are responsible for paying your own in the form of provisional tax, which is paid twice a year by the 31 August and then 28 February. As a freelancer, you are required to pay 25% tax on any income you earn, unless the client or company does it on your behalf. This sounds like a lot — and it is definitely something to consider when you are setting your rates — but there are ways to claim some of it back, as well as simplify this daunting ordeal so that you stay solvent and stress-free. Here are four ways to prep for the process.
1. Get ready for a double-whammy
It can come as a shock to the system (and your bank account) the first time you are faced with having to make two large payments to SARS. Bear this in mind and set aside money in advance. Even better, stash it in an interest-bearing account until you need to access it so that you can eke a little something out of it.
2. Track all of your business expenses
As a freelancer, you are a one-person business and, as such, you will be able to claim back some of your tax for business-related expenses, such as airtime, data, office supplies and even coffee at meetings. Keep a spreadsheet and the receipts to have proof of these deductibles for the taxman.
3. Claim cash back if you work from home…
Despite co-working spaces becoming increasingly popular, most freelancers work from home to save on time and costs. And this is another thing you can claim back from SARS. All you need to do is add up your monthly household costs (rates, electricity and water) and divide them by the size of your home office.
4. …and for your medical expenses, too!
Yet another thing that you are able to claim back for so as to line your pockets a little bit is medical expenses, specifically medical tax credits, which you are eligible for if you contribute to a medical aid scheme. This is submitted using an IRP6 form and needs to accompany one of your two annual payments.
Guild makes tax season a breeze by giving you an overview of your business and personal expenses. Click here to download the app for forward-thinking freelancers.
