Govchain calls on all young entrepreneurs to secure the long-term success and sustainability of their businesses by ensuring they are fully tax compliant when the 2025 tax year comes to an end on the 28th of February this year.
While some entrepreneurs do take chances with tax evasion, poor tax compliance among young business owners is often due to the fact that entrepreneurs in the youth category tend to dedicate all their resources and energy towards maximising sales, and securing a steady cash flow. Sadly, this affords them very little time to carefully ensure they meet all South African Revenue Services (SARS) requirements.
“While South Africa currently faces a youth unemployment rate of approximately 45%, data from Finscope indicates that a considerable 30% of SMMEs owners are 35 years or younger, underpinning the role that the youth play in building a resilient economy and creating jobs” says Stefan Kritzinger, Head of Compliance & Support at Govchain.
Kritzinger adds that unfortunately, there are severe, business-ending consequences for tax evasion or non-compliance for young entrepreneurs in South Africa today: “Besides issuing a punitive fine for non- or poor compliance, SARS can also levy additional charges for submissions and payments, and in extreme cases, shut down your business due to gross non-compliance.”
Kritzinger adds that tax compliance should not just be seen as paying the government to do its job. There are advantages, if leveraged strategically, that can help a youth-led business thrive. By complying with the law, their businesses are able to build and retain credibility.
“There is nothing worse for the reputation of a youth-led business than being the subject of a Sunday Times article exposing how SARS is pursuing a criminal case against your company. Tax compliance further opens up opportunities to apply for contracts with big companies or the government, which require a tax clearance certificate for trading. Most importantly, tax compliance helps a youth-led business avoid unnecessary costs, ultimately protecting the integrity of its cash flow,” adds Kritzinger.
“Besides the obvious mistakes of missing deadlines and ignoring provisional tax, youth-led businesses can fall into the trap of registering for the wrong taxes such as paying value added tax when you should be paying corporate income tax. Misclassifying business expenses is also an easy mistake to make and can come with costs or missing out on critical tax refunds,” Kritzinger explains.
Nonetheless, tax compliance is not a beast to be afraid of. Service providers, such as Govchain, exist to assist SMMEs with tax compliance, offering affordable rates for all the tax services our youth-led businesses might require.
Depending on the type of business, the tax refund might even cover the full cost of these services, resulting in no additional costs to the business’s cash flow, while simultaneously avoiding severe financial consequences down the line.
“The youth of South Africa are well-positioned to excel as entrepreneurs and business leaders despite the number of risks and challenges that present themselves in our local economy. Being young offers the freedom to take risks without significant financial responsibilities, encouraging young people to learn from mistakes and recover quickly. Embracing failure as part of the journey builds resilience, and failing early inadvertently accelerates success. Understanding that perfection is not expected reduces pressure, encouraging more risk taking to achieve goals. Just be sure to have your taxes in order throughout this process,” Kritzinger concludes.