Year one for a new South African business: the compliance runway

Registering a company takes a few days. Staying compliant with the obligations that registration creates takes the rest of the year, and most of the expensive mistakes are made in the first three months.

This is the sequence we walk new clients through.

Weeks one to four: the foundations

Separate the money immediately. Open a business bank account before you take a single payment. Mixing personal and business transactions is the single biggest driver of accounting fees for small companies, and it undermines the limited liability you registered for.

Confirm your income tax registration. A company registered through CIPC is registered for income tax automatically and issued a tax reference number. Confirm it has come through and that your public officer is appointed and recorded with SARS. A company without a registered public officer cannot transact properly with SARS.

Decide on a financial year-end. February is the default and keeps you aligned with the individual tax year, which is simpler if you are drawing income personally. A different year-end can suit a seasonal business. Change it later and you deal with a short accounting period.

Set up bookkeeping from the first transaction. Reconstructing nine months of records from a shoebox in month ten costs several times what recording them as you go would have.

Months one to three: registrations that depend on what you do

PAYE, UIF and SDL. The moment you employ anyone, including yourself as a working director on a salary, you must register as an employer. EMP201 declarations are then due by the 7th of the following month.

VAT. Registration is compulsory once taxable supplies exceed the threshold in any twelve-month period. From 1 April 2026 that threshold rose from R1 million to R2.3 million, which keeps a lot of new businesses out of the VAT system for longer than used to be the case.

Voluntary registration remains available above the lower threshold, which was raised to R120 000. It is worth considering if your customers are themselves VAT vendors and you carry meaningful input VAT. It is usually not worth it if you sell to the public and would simply be adding 15% to your prices.

Compensation Fund (COIDA). Employers must register and submit an annual return of earnings. It is routinely forgotten, and a letter of good standing is often required before larger customers will contract with you.

Month six: the first provisional payment

Six months after your year-end starts, the first IRP6 falls due. For a February year-end that is 31 August. A first-year company with no prior assessment has no basic amount to fall back on, so the estimate has to be built from your actual results to date.

Months eleven and twelve: the annual cycle begins

CIPC annual return. Due each year within 30 business days of the anniversary of incorporation. This is a CIPC filing and is entirely separate from your tax return. Companies are deregistered for persistent failure to file it, and reinstatement is slow.

Annual financial statements. Every company must prepare them. Whether they need to be audited, independently reviewed, or neither depends on your public interest score and who compiled them.

Second provisional payment, by the last business day of your year-end month.

ITR14 income tax return, due within twelve months of your financial year-end.

Decisions that are cheap now

• Keep every source document. The Tax Administration Act generally requires records to be kept for five years. Bank statements alone are not sufficient support for a deduction.
• Write down what shareholders agreed. Founder disputes are far more common than tax disputes and considerably more damaging.
• Decide how you will be paid. Salary, dividends, or a mix. The tax outcome differs and the decision is easier to structure at the start than to unwind later.
• Do not let a small liability age. Administrative penalties recur monthly, and SARS applies them to returns that were never filed as readily as to ones filed late.

What a first year should cost you

Most owners overestimate the cost of getting this right and underestimate the cost of getting it wrong. Monthly bookkeeping and a compliance calendar for a small company is a modest fixed cost. A year of unrecorded transactions, a deregistered company and recurring administrative penalties is not.

If you have registered recently and are not sure what has already fallen due, we can do a compliance check against CIPC and SARS and give you the list.