Young entrepreneurs urged to prioritise tax compliance to avoid fines

Young South African entrepreneurs need to ensure that they are fully tax-compliant when the 2025 tax year comes to a close on February 28 to secure their long-term success and sustainability, according to Govchain.

While some entrepreneurs do take chances with tax evasion, poor tax compliance among young business owners is often due to entrepreneurs in the youth category dedicating all their resources and energy towards maximising sales, and securing a steady cash flow.

This means that they have very little time to carefully ensure they meet all South African Revenue Services (Sars) requirements. 

Stefan Kritzinger, head of Compliance & Support, Govchain said that unfortunately, there are severe, business-ending consequences for tax evasion or non-compliance for young entrepreneurs in SA 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 said. 

Tax compliance should not just be seen as paying the government to do its job. If leveraged correctly, there are advantages that can help a youth-led business thrive. By complying with the law, their businesses are able to build and retain credibility. 

"Tax compliance further opens up opportunities to apply for contracts with big companies or the government, which requires 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," Kritzinger explained.

"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 they 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."

SA youth are well-positioned to shine as entrepreneurs and business leaders despite the various risks and challenges that present themselves in the local economy.

"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 said. 

IOL Business