How to Handle VAT If You're Not an Accountant

Simple Rules to Help You Stay Compliant and Avoid Costly Mistakes

📌 What is VAT?

VAT (Value-Added Tax) is a tax charged on most goods and services sold in South Africa. The current rate is 15%.

If your business is registered for VAT, you must charge VAT on your sales, collect it from your customers, and then pay it over to SARS — usually every 2 months.

✅ When Must You Register for VAT?

You must register if:

Your business makes more than R1 million in sales (not profit) over any 12-month period.

You can register voluntarily if:

You make more than R50,000 in sales over 12 months, and want to claim back VAT on expenses.

🚨 Important: If you pass the R1 million mark and don’t register, SARS can charge penalties and backdate VAT — costing you a lot.

💼 Once You’re Registered: Here’s What You Need to Do

1. Charge VAT on Your Sales

Add 15% VAT to every invoice.
Clearly state “VAT Inclusive” or “VAT Exclusive”.
Your invoice must include your VAT number and follow SARS’ invoice format rules.

💡 Use invoicing software to make this easier and avoid errors.

2. Keep VAT Records (Don’t Mix Business and Personal)

Keep copies of all sales invoices.
Keep valid tax invoices for every purchase you claim VAT on (must say “TAX INVOICE” and show the supplier’s VAT number).
Don’t claim VAT on personal or mixed-use items.

3. Submit VAT Returns (VAT201) Every 2 Months

Submit your VAT201 form via eFiling.
Show how much VAT you collected and how much you paid on business expenses.

SARS will then calculate if you must pay VAT or if they owe you a refund.

4. Pay SARS on Time

VAT returns are usually due by the 25th (manual) or end of the month (eFiling) every 2 months.
Late submissions or payments = automatic penalties and interest.

🚫 Common VAT Mistakes That Can Cost You

Charging VAT when you’re not registered

Illegal. You must refund the VAT to customers and could be fined.

Not keeping valid tax invoices

You cannot claim input VAT unless the supplier’s invoice is correct.

Claiming VAT on non-VAT items (like salaries, drawings, or fines)

SARS may reject your return or audit you.

Not updating SARS when your details change

Outdated bank info can delay refunds or flag non-compliance.

Mixing personal and business expenses

Only business-related purchases qualify for input VAT claims.

🧾 Top Tips to Handle VAT Without Being an Accountant

Use simple cloud-based accounting software (like Sage, QuickBooks, Xero).
Open a separate bank account for VAT.
Keep a digital folder for all tax invoices and receipts.
Set a monthly VAT check-in: Review your invoices and expenses.
Work with a tax practitioner or bookkeeper to review your VAT returns before submission.

✅ Let Prosperity Accounting Help You Get VAT Right — From Day One

At Prosperity Accounting and Bookkeeping Solutions, we help small business owners stay compliant, stress-free, and in control of their VAT.

👉 Book a FREE 15-minute VAT check-up call to find out: