r/PersonalFinanceZA • u/Beneficial_6943 • 6d ago
Taxes Sole prop vs PTY when exporting
I just moved back to SA after living abroad for a while. I was a creative freelancer hand making and selling mainly through ecomm. I never had issues with liability, customs etc. Each shipment was a max value of +/- R9000.
Now I'm struggling to figure out the best set up for my business here. I've spoken to a few accountants who think a PTY is the best step, especially as I will need an export licence. But when I speak to people I know with similar business set ups, they advise me to start as simple as possible, especially as I will probably not earn much for a while as I get my business going again in a new country.
I'm wondering if anyone can give me their advice or personal experience here. I understand that there are benefits to a PTY but as I earn such a little amount I feel like the expense of keeping on top of it will be a drain on my income.
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u/Flaky-Replacement239 6d ago
PTY is the best option, scaling up after a CC is harder, and as you make more your tax rate will be higher compared to a PTY.
Additionally the annual revenue of PTY will probably qualify for a SBC rate which is much lower than the 27%
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u/curious_jellyfish23 6d ago
For your needs PTY is probably better - you get an SMB turnover tax benefit in your first year which is a help, you can end up paying little to no tax depending on how you set things up. But generally an accountant would need to help you with this. You also get to separate your business liability from your personal self which with the type of business you described sounds like a safer bet.
The decision really comes down to: are you ready to deal with the list of tasks that need to be done when you have a PTY - and whether you actually have to get an accountant and pay for an accountant:
- Beneficial ownership doc submissions yearly
- Annual financial submissions yearly
- Provisional tax submissions twice a year
- Bookeeping and reconciliation of books every two months
- PAYE and monthly employee 201's
- EMP501's twice monthly
- Register for VAT after R2.3 million turnover and submit vat returns every two months (but this is a requirement as a prov tax payer too)
It can be done without an accountant but takes up a lot of time.
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u/Beneficial_6943 6d ago
Thanks, I would definitely get an accountant to help if I become a PTY... I'm just trying to weigh up whether it's worth the cost of an accountant plus all the admin that goes with it. I had an accountant try set up a PTY for me but its taking so long because SARS keeps rejecting my request to be a registered rep and Christmas is round the corner... need to start exporting stuff soon.
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