Your First Tax Year as a New Company: What to Do After Registration

Starting a business is exciting, but your first tax year is where things can get messy if you do not stay organized. The good news is that SARS gives small businesses a clear framework: keep proper records, file on time, and store your supporting documents safely. That responsibility stays with the business owner, even if a tax practitioner helps with the filing.

This guide is written for beginners and is updated for the 2026 tax year. It covers new companies, sole proprietors, partnerships, and nonprofit companies in simple language.

What to do right after registration ✅

If you registered a company, SARS says the company will automatically get an income tax reference number after CIPC registration, and the company representative must then use eFiling to update details and transact online. If you are a sole proprietor or in a partnership, SARS says you register for Personal Income Tax directly with SARS via eFiling.

Your first job is simple: make sure your tax profile is active, your banking details are correct, your contact details are up to date, and your business records start from day one. SARS warns that tax payments must be made on time to avoid interest and penalties.

The financial records small businesses must keep 📁

Good record keeping helps you explain what appears on your tax return if SARS asks questions later. SARS specifically mentions supporting documents such as sales slips, invoices, receipts, bank deposit slips, and other documentation as part of staying compliant. Records must be kept in their original form, in an orderly way, in a safe place, and available for inspection or audit. SARS also allows electronic records, where acceptable.

Here is the practical beginner checklist:

• Sales invoices and receipts 🧾 — keep proof of every sale you make so your income can be verified. SARS says supporting documents are important when explaining what was declared on your income tax return.
• Supplier invoices and expense receipts 🧮 — keep proof of business purchases, because these help support your expenses and make your records easier to review.
• Bank statements and bank deposit slips 🏦 — use these to match money coming in and going out of the business. SARS specifically lists bank deposit slips as part of the supporting documents to retain.
• Tax invoices for VAT purposes 📌 — if you are a VAT vendor, SARS says you cannot deduct input tax without a proper tax invoice. A valid tax invoice must contain the required details, and it is generally issued within 21 days of the supply.
• Payroll records if you have staff 👷 — if you employ people, keep employee payment and tax records carefully because employers must deduct and pay over PAYE, and SARS guidance requires employer records to be retained.
• Contracts, lease agreements, and asset purchase records 🗂️ — these help show why money was spent and what belongs to the business. They also support a cleaner audit trail, which is exactly what SARS record keeping is designed to do.

SARS says records must generally be kept for five years from the date of submission of a return, and in some cases longer if a return was not submitted, a dispute is open, or an audit is underway.

What sole proprietors and partnerships should do differently 👤👥

If you are a sole proprietor, SARS treats you as an individual for tax purposes. The small business guide says you must register for Personal Income Tax and declare your business income on the ITR12. If you are in a partnership, SARS says each partner is taxed separately according to their share, and each partner also declares their business income on the ITR12.

That means your bookkeeping should be simple, clean, and separate from personal spending. Even if you are not a company, you still need proof of income, expenses, and any money moved in or out of the business.

What companies need to remember in the first tax year 🏢

For companies, SARS says the company must submit an annual ITR14 return, and provisional tax returns are also required for most companies. SARS states that provisional tax is submitted twice a year, with a first return due six months from the start of the year and a second return at year-end, while the company’s ITR14 must be submitted within 12 months after the financial year-end.

The easiest way to stay on top of this is to keep one folder for income, one for expenses, one for VAT documents, one for payroll, and one for company legal documents. That simple structure makes your year-end far less stressful.

VAT records you should keep if your business is registered or about to register 💡

SARS says the compulsory VAT registration threshold is increasing from R1 million to R2.3 million, with the change effective from 1 April 2026. The voluntary registration threshold is also being increased to R120 000.

If you are already VAT registered, keep every valid tax invoice, because that is the key document SARS uses to support input tax claims. This is one of the biggest reasons new businesses get into trouble: they have the expense, but not the correct paperwork.

Nonprofit companies and SARS tax exemption 🤝

Nonprofit companies are not automatically tax exempt. SARS says the preferential tax treatment for nonprofit organisations is not automatic, and organisations that meet the requirements in the Income Tax Act must apply for exemption. To apply, an entity must first register for Income Tax, create an eFiling profile, and then submit the exemption application using its Income Tax reference number.

SARS also explains that approved Public Benefit Organisations can apply for additional approval to issue tax-deductible donation receipts under section 18A, but that approval is separate from basic exemption. Approved PBOs must keep books, records, and documents for five years from the date of submission of the income tax return.

If your nonprofit is new, the safest approach is to register correctly first, keep every founding document and financial record in order, and only then apply for the tax status that fits your organisation.

A simple first-year record system you can start today 📌

Use this structure from day one:

Keep a folder for income, a folder for expenses, a folder for banking, a folder for VAT, a folder for payroll, and a folder for legal and company documents. Save every document as soon as you receive it, and back it up digitally so nothing gets lost. This matches SARS’s requirement that records be kept orderly, safely, and in a form that can be inspected if needed.

A business that keeps tidy records is much easier to manage, easier to tax, and far less likely to face avoidable delays later.

Final checklist before your first year-end ✅

Before your first tax year closes, make sure you have:

• all income recorded,
• all expenses supported by documents,
• bank statements filed,
• VAT documents stored correctly,
• payroll records saved if you have employees,
• and your company, sole proprietor, partnership, or nonprofit tax obligations understood.

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A Real-Life Example Many New Business Owners Face

In early 2026, Thabo started a small electrical services business in Gauteng. Like many new entrepreneurs, he focused on getting clients and completing jobs. He kept most of his receipts in a drawer and sometimes forgot to save invoices or bank confirmations.

About a year later, SARS asked him to provide supporting documents for his tax return. Suddenly he realised something: he could not find several supplier invoices and some of his expense receipts were missing.

SARS requires businesses to keep proper financial records and supporting documents because they may request them to verify the information declared on a tax return. These records must generally be kept for at least five years after submitting a return.

Because Thabo could not provide complete documentation, SARS disallowed some of his expense claims and issued an additional assessment. On top of that, penalties and interest started accumulating while he tried to fix the problem. Even relatively small compliance issues can lead to monthly penalties and extra tax liabilities if returns or documentation are missing.

The experience was stressful and expensive—but it could have been avoided with proper record-keeping from the start.

Today, Thabo keeps all his business records organised in digital folders for income, expenses, VAT invoices, and bank statements. His accountant now submits his returns smoothly, and when SARS asks for documents, everything is easy to find.

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Frequently Asked Questions