I have just got my first Sole Proprietor client. I am aware personal & business tax is all together. I am unsure how much turnover a Sole Proprietor is allowed to make. Is there a cap? When start paying vat do they need to register as a company?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Please note that we only provide guidance. We will therefore not comment on whether or not the individual should incorporate the company.
We are not sure why you have a concern regarding the ‘turnover’ and assume the request relates to whether or not the individual can register as a micro business – see the Sixth Schedule to the Income Tax Act. The qualifying turnover (a defined term) must not exceed R1 million for the relevant year of assessment (or proportionately so).
The fact that the individual must (or voluntary) register as a vendor, on its own, is not sufficient reason to incorporate. We don’t have a “link to … red up on … this”. The internet would be a good place to start, but ultimately you will have to base the decision, not only on the tax consequences (or potential benefits).