As a Sole Proprietor you, the owner and the business are the same legal entity. You the owner have full control over the business. The rules and set up for a Sole Proprietor are very basic and easy, however, like with anything, there are risks. For example, if something goes wrong and the business has to close, you the owner are responsible for all the business debts.
You are personally responsible for all business and personal taxes. The business income and expenses will be declared on your personal tax returns. You will register with SARS as an individual taxpayer and as a provisional taxpayer. As a Sole Proprietor, you will have 3 tax returns due per tax year.
- 2 Provisional tax returns (August and February)
- 1 Income tax return (January)
You, the owner, are taxed on the profits at the applicable personal income tax rate. Your business’s profits will be included in your individual tax returns.
There are no legal requirements when starting up a practice as a sole proprietorship. All in all, a sole proprietorship is the most simple business entity and there is little separation between you personally and the business.