In the current economic climate where it pays to be your own boss, having your finger in a number of smaller pies (rather than putting all your eggs in one basket) is one of the most profitable ways to go. Small business has also been given a helping hand in the latest tax revisions.

Some of the benefits you may be able to get this tax season include being able to claim higher wear and tear on assets as well as reduced tax rates on the first R365 000 profit. Profit of R67 111 or less are not taxable, and only the amount above R67 111 (up until R365 000) will be taxed at a rate of 7%. Compared to the huge jump up to over 21% tax in the next profit bracket, this is a huge advantage for small businesses.

One challenge with accessing tax benefits for a small business is that having just one small business – one of the provisos of accessing the above benefits – is not really the most lucrative position to be in. You want to have a few running simultaneously, but this means that the tax benefits no longer apply.

Thankfully, Galbraith and Rushby have some easy advice for how you can have your cake and eat it too. They were posed with this problem…

Question – I have two companies which I am a shareholder of and I heard about the small business tax benefits.  How would I qualify?

Answer – One of the key requirements is that you must be a shareholder of only one company or member of only one close corporation.  Assuming the turnover is within the revenue threshold and the business is not precluded due to its nature then the simplest would be to sell your shares in the one company to the other and make it the holding company.  The company that you keep your shares in will qualify as a small business and you will get your tax benefits.

For more sound advice on how to make the most our of small businesses give Galbraith Rushby a call. You can also find more details on the tax benefits afforded to small businesses at SARS.